Download AP Statistics Quiz – Chapter 15 Name I understand that I may use

AP Statistics Quiz – Chapter 15
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A cell phone company offers a simple extended warranty plan. If your phone is damaged, they will repair it
for up to $50. If you lose or destroy your phone, they will give you a $200 voucher towards a new phone.
The company believes that 5% of customers will need the replacement voucher and 10% will request a
repair.
1. If the company charges $25 for this extended warranty, what is the expected value of the profit they
will earn?
2. What is the standard deviation of their profit?
3. Suppose the company collects 10 warranty plans on one day. What is the mean of the company's total
profit?
4. What is the standard deviation of the 10 total warranty plans?
5. What assumption does question 4’s calculation require? Do you think this assumption is reasonable?
6. What are the mean and standard deviation for the profit on 1000 plans?
7. Assuming that the distribution of the company’s yearly profit on the 1000 plans can be described with a
Normal model, what is the probability the company loses money on the warranties?
8. Given that a family will probably buy dozens of devices over the next decade, would it be wise for the
family to plan on purchasing these warrantees with their phones?