The probability that a new advertising campaign will increase sales is estimated to be 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) 0.68.
B) 0.88.
C) 0.32.
D) 0.20.

Question

Quizplus · Accepted Answer

To find the probability that the cost is kept within budget or the campaign will increase sales, we need to use the formula for the probability of the union of two events: P(A or B) = P(A) + P(B) - P(A and B), where A and B are the two events. Since the events are independent, we know that P(A and B) = P(A) × P(B). Therefore, we have:

P(cost within budget or increase in sales) = P(cost within budget) + P(increase in sales) - P(cost within budget and increase in sales)

= 0.40 + 0.80 - (0.40 × 0.80)

= 0.88

Therefore, the probability that the cost is kept within budget or the campaign will increase sales is 0.88, which is choice B.

The Probability That a New Advertising Campaign Will Increase Sales