Problem 14E

The chair of the board of directors says, “There is a 50 percent chance this company will earn a profit, a 30 percent chance it will break even, and a 20 percent chance it will lose money next quarter.”

a. Use an addition rule to find the probability the company will not lose money next quarter.

b. Use the complement rule to find the probability it will not lose money next quarter.

Solution

Step 1 of 3

Let A be the event that company will earn profit

Then P(A)=0.5

Let B be the event that company will break even

Then P(B)=0.3

Let C be the event that company will lose money

Then P(C)=0.2