The probability that a new advertising campaign will increase sales is assessed as being 0.80. The probability that the cost of developing the new ad campaign can be kept within the original budget allocation is 0.40. Assuming that the two events are independent, the probability that the cost is kept within budget or the campaign will increase sales is
A) 0.20.
B) 0.32.
C) 0.68.
D) 0.88.

Question

Quizplus · Accepted Answer

The probability of either event occurring is found using the formula for the union of two independent events: P(A or B) = P(A) + P(B) - P(A and B). Here, P(A) = 0.80 and P(B) = 0.40. Since the events are independent, P(A and B) = P(A) * P(B) = 0.80 * 0.40 = 0.32. Thus, P(A or B) = 0.80 + 0.40 - 0.32 = 0.88.

The Probability That a New Advertising Campaign Will Increase Sales