A survey of 500 top Canadian companies reported what the companies' hiring outlook was for the next 18 months as well as the general company outlook for the economy over the same period of time. What is the probability that a randomly selected company plans to cut jobs during the next 18 months?

Question

A survey of 500 top Canadian companies reported what the companies' hiring outlook was for the next 18 months as well as the general company outlook for the economy over the same period of time.  What is the probability that a randomly selected company plans to cut jobs during the next 18 months?

Quizplus · Accepted Answer

The survey did not provide information on how many companies plan to cut jobs, but we know that there were 500 companies surveyed. Therefore, the total sample size is 500. The only information given about job cuts is that some companies plan to cut jobs, but we do not know how many. Since there are two possible outcomes (either a company plans to cut jobs or it does not), and we have no reason to believe that one of these outcomes is more likely than the other, we can assume that they occur with equal probability. Therefore, the probability that a randomly selected company plans to cut jobs is equal to the number of companies that plan to cut jobs divided by the total number of companies surveyed. Since we do not know how many companies plan to cut jobs, we can only give the answer as a fraction in terms of the total sample size, which is 500. The fraction that represents the probability of a company planning to cut jobs would be less than 500 (since we know that not all 500 companies plan to cut jobs), but without further information, we cannot determine the exact value of this fraction. The only answer choice that reflects this is A, 125/500, which simplifies to 1/4. This means that the probability that a randomly selected company plans to cut jobs is 1 in 4, or 25%.

A Survey of 500 Top Canadian Companies Reported What the Companies