A certain type of new business succeeds 60% of the time. Suppose that three such businesses open (where they do not compete with each other, so it is reasonable to believe that their relative successes would be independent). Which of the following distributions would you use to determine the probability that all of them will fail?
A) binomial distribution
B) Poisson distribution
C) both of the above
D) none of the above

Question

Quizplus · Accepted Answer

We would use the binomial distribution to determine the probability that all three businesses will fail since there are a fixed number of trials (three businesses) and each trial can have only two outcomes (success or failure). The Poisson distribution is used for counting the number of rare events in a fixed interval of time or space, and is not appropriate for this scenario.

A Certain Type of New Business Succeeds 60% of the Time