THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
The probability that interest rates on housing loans will go up in the next 6 months is estimated to be 0.20.The probability that house sales will decrease is estimated to be 0.6.The probability that interest rates will go up and house sales will decrease is estimated to be 0.15.
-The probability of an increase in interest rates and not a decrease in house sales is:
A)0.20
B)0.05
C)0.25
D)0.50

Question

Quizplus · Accepted Answer

We know that the probability of interest rates going up AND house sales decreasing is 0.15. And we also know that the probability of house sales decreasing is 0.6. So, to find the probability of interest rates going up AND house sales NOT decreasing, we can subtract the probability of interest rates going up AND house sales decreasing from the probability of interest rates going up: 
0.20 - 0.15 = 0.05. Therefore, the probability of an increase in interest rates and not a decrease in house sales is 0.05.