Zemanskys sells tires with a pro rata warranty the tires, Management Theories

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Zemanskys sells tires with a pro rata warranty the tires

Question: Zemansky's sells tires with a pro rata warranty. The tires are warranted to deliver 50,000 miles with the rebate based on the remaining tread on the tire. The tires fail on the average after 35,000 miles of wear. Suppose the tires sell for $50 each with the warranty. If failures occur completely at random, what would be a consistent price for the tires if no warranty were offered?

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Management Theories: Zemanskys sells tires with a pro rata warranty the tires

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Management Theories: Zemanskys sells tires with a pro rata warranty the tires

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