Final answer:
The coefficient of the x^7 term in the generating function is 0.0177.
Step-by-step explanation:
To find the coefficient of the x7 term in the generating function, we need to determine the probability that the first defect is found in the seventh component tested. This can be represented by a geometric distribution with a success probability of 0.02. The probability of this event occurring is given by P(x = 7) = 0.0177.