Question

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 as campaign can be kept within the original budget allocation is 0.30. Assuming that the two events are independent, the probability that the cost is kept within budget or the campaign will NOT increase sales is ____. Answer given 0.440

Answer 1

A : Event of advertising campaign will increase sales

: Event of advertising campaign will not increase sales

B : The cost of developing the new as campaign can be kept within the original budget allocation

P(A) = 0.80

P(B) = 0.30

As the Events A and B are assumed independent ; and B are also independent

P( and B) = P() P(B) = 0.2 x 0.3 = 0.06

Probability that the cost is kept within budget or the campaign will NOT increase sales = P(B or )

P(B or ) = P(B) + P() - P(B and )

P(B and ) = P( and B) = 0.06

P(B or ) = P(B) + P() - P(B and ) = 0.3+0.2 - 0.06 = 0.5-0.06 = 0.440

Probability that the cost is kept within budget or the campaign will NOT increase sales = 0.440