Problema Solution
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 and the campaign will increase sales is:
Answer provided by our tutors
We know that for Independent Events A and B:
P(A and B) = P(A) × P(B)
Probability of A and B equals the probability of A times the probability of B.
In our case the events are:
A: the campaign will increase sales
P(A) = 0.80
B: the probability that the cost is kept within budget
P(B) = 0.40
A and B: the cost is kept within budget and the campaign will increase sales
P(A and B) = P(A) x P(B)
P(A and B) = 0.80 x 0.40
P(A and B) = 0.32
the probability that the cost is kept within budget and the campaign will increase sales is 0.32.