A toy store has found that 30% of its customers spend more than $40 each visit. What is the probability that the next two customers will each spend more than $40?
p(>30)=.3^2=.09
To calculate the probability that the next two customers will each spend more than $40, we need to assume that the spending behavior of customers is independent. In other words, the spending of one customer does not affect the spending of the other customer.
Since the probability of each customer spending more than $40 is 30%, we can say that the probability of a customer spending less than or equal to $40 is 70% (100% - 30%).
Now, to calculate the probability that the next two customers will each spend more than $40, we need to multiply the probabilities together. This is because we want to find the joint probability of two independent events happening.
The probability of the first customer spending more than $40 is 30% or 0.3. Therefore, the probability of the first customer spending less than or equal to $40 is 70% or 0.7.
Since these two events are independent, the probability of both events happening is the product of their individual probabilities. So, the probability of both events happening is:
0.3 * 0.3 = 0.09
Therefore, there is a 9% probability that the next two customers will each spend more than $40.