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Bob, the proprietor of Midland Lumber, believes that the odds in favor of a business deal going through are 9 to 5. What is the (subjective) probability that this deal will not materialize? (Round your answer to three decimal places.)

User IFederx
by
7.4k points

1 Answer

2 votes

Answer:

There is a 35.7% probability that this deal will not materialize.

Explanation:

This problem can be solved by a simple system of equations.

-I am going to say that x is the probability that this deal materializes and y is the probability that this deal does not materialize.

The sum of all probabilities is always 100%. So


1) x + y = 100.

Bob, the proprietor of Midland Lumber, believes that the odds in favor of a business deal going through are 9 to 5.

Mathematically, this means that:


2) (x)/(y) = (9)/(5)

We want to find the value of y. So, we can write x as a function of y in equation 2), and replace it in equation 1).

Solution:


(x)/(y) = (9)/(5)


x = (9y)/(5)


x + y = 100


(9y)/(5) + y = 100


(14y)/(5) = 100


14y = 500


y = (500)/(14)


y = 35.7

There is a 35.7% probability that this deal will not materialize.

User Amit Prasad
by
9.0k points
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