Question

A study of 264 advertising firms revealed their income after taxes: Income after Taxes Number of...

A study of 264 advertising firms revealed their income after taxes:

Income after Taxes Number of Firms
Under $1 million 148
$1 million to $20 million 67
$20 million or more 49

a. What is the probability an advertising firm selected at random has under $1 million in income after taxes? (Round your answer to 2 decimal places.)

b-1. What is the probability an advertising firm selected at random has either an income between $1 million and $20 million, or an income of $20 million or more? (Round your answer to 2 decimal places.)

b-2. What rule of probability was applied?

  • Rule of complements only

  • Special rule of addition only

  • Either

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Answer #1

a. Probability that an advertising firm selected at random has under $1 million in income after taxes?


= (148/264) = 0.56

b-1. Probability an advertising firm selected at random has either an income between $1 million and $20 million, or an income of $20 million or more

= (67/264) + (49/264) = 0.44

b-2. We can apply both the rules here. The solution given above is special rule of addition. We can also apply rule of complements. That is

Probability = 1 - P( firm has income under $1 million)

= 1 - (148/264) = 0.44

Rule of complements only

Special rule of addition only

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