Question

In: Statistics and Probability

Applegate Inc. has developed a new shampoo with a distinctive fragrance. Before distributing it nationally, Applegate...

Applegate Inc. has developed a new shampoo with a distinctive fragrance. Before distributing it nationally, Applegate will test market the new product. The joint probability of a successful test market and high sales upon national distribution is 0.5. The joint probability of a successful test market and low sales nationally is 0.1. The joint probabilities of an unsuccessful test market and either high or low sales are both 0.2.

Construct a joint probability table and then answer the following questions.

Questions

Answers

a.

What is the marginal probability of a successful test market?

b.

What is the conditional probability of high sales given a successful test market?

c.

What is the conditional probability of a successful test market given that the product is destined for high sales nationally?

Solutions

Expert Solution

Answer:

a) Consider the above table which is given as below.

b) Consider the above table.

c) consider the joint probability table.

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