## Question 701:

1## Answer:

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We want to use the binomial probability distribution here to calculate the probabilities.Part A

We need to calculate the probability of exactly one event, so we use the formula for the Binomial Probability Mass function or pmf. The hand computations are a bit tedious and its recommended to use software.

- In MegaStat select Probability > Discrete Probability Distributions > Binomial
- Enter p as .5 and n as 5 (see the attached sheet for the megastat output).
- In excel you can use also use the formula =BINOMDIST(3,5,0.5,FALSE).

Part B

The scenario is binomial since each trial is independent (each customer's choice isn't dependent on another), the outcomes are binary (only purchase not purchase) and the sample is not large relative to the population.