Suppose 5% of the people who buy a certain type of DVD player return it to get their money back.The DVD player costs $100.What is the expected loss, per customer, for the company due to returns (ignoring the monetary value of the returned DVD player)?
A)$5
B)$0; most people don't return it
C)Either $0 or $100, but it is impossible to determine which.
D)$100

Question

Quizplus · Accepted Answer

If 5% of customers return the DVD player, the company will lose $5 for each customer who returns the product (5% of $100). Therefore, the expected loss per customer due to returns is $5.

Suppose 5% of the People Who Buy a Certain Type