Five percent of all items sold by a mail-order company are returned by customers for a refund. Find the probability that of two items sold during a given hour by this company both will be returned for a refund
To find the probability that both items sold during a given hour will be returned for a refund, we need to multiply the probabilities of each event happening.
Let's start by finding the probability of one item being returned for a refund. We know that five percent of all items are returned, so the probability of one item being returned is 0.05.
Since there are two items being sold, we need to find the probability for each item being returned and then multiply them together.
P(both items returned) = P(item 1 returned) * P(item 2 returned)
P(both items returned) = 0.05 * 0.05
P(both items returned) = 0.0025
The probability that both items will be returned for a refund is 0.0025, which is equivalent to 0.25%.