You can choose to buy an extended warranty for your computer for $200. During this period, you will experience either a minor ($100) or major ($500) repair bill. If you buy the warranty, you will not have to pay the repair bill. Assume the company wants to make as much money as possible, and you wish to spend as little as possible. Which of the following is a true statement?
A) This game has no saddlepoint.
B) This game has a saddlepoint; the value of the game is $100.
C) This game has a saddlepoint; the value of the game is $200.
D) This game has a saddlepoint; the value of the game is $500.

Question

Quizplus · Accepted Answer

The company wants to make as much money as possible, so it will always choose the option that costs the customer more money. The customer wants to spend as little as possible, so they will always choose the option that costs them less money. The only option that satisfies both of these conditions is for the customer to buy the extended warranty, which costs $200.

You Can Choose to Buy an Extended Warranty for Your