Question

Sony introduces a new compact music player that carries a two-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, what are the expected warranty costs?

1) Higher than average
2) Lower than average
3) Equal to average
4) Cannot be determined

Answer 1

The correct option is Option 1). Based on industry experience with similar product introductions, the expected warranty costs for Sony's new compact music player are higher than average.

Step-by-step explanation:

Expected Warranty Costs for Sony's New Compact Music Player

Based on industry experience with similar product introductions, the expected warranty costs for Sony's new compact music player are higher than average. This is because the product is newly introduced and carries a two-year warranty against manufacturer's defects. New products often have a higher likelihood of encountering defects and requiring repairs or replacements, which can drive up warranty costs.

For example, the new compact music player may have design flaws or manufacturing issues that only become apparent after being used by customers. These defects could result in a higher number of warranty claims and repairs, thereby increasing the overall cost of warranties for Sony.

Therefore, the correct option is Option 1) Higher than average.