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It is difficult to make budgetary projections in the current economic climate. In particular, a decision regarding long-range planning will be made, in part, using the likelihood that the current recession will last less than 1.5 years. To estimate this probability, information from all previous recessions in the United States has been gathered. Of the 18 previous recessions, exactly 6 lasted less than 1.5 years. Assuming that the current recession is an observation from the same random experiment that produced the previous recessions (while admitting that this assumption is probably not strictly true) please produce a reasonable estimate of the probability that the current recession will last less than 1.5 years and justify the estimate.

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Solution Summary

The solution discuses estimates and justifications for the current economic climate. Assuming that the current recession is an observation from the same random experiment that produces the previous recession, the expert produces a reasonable estimate of the probability that the current recession will last less than 1.5 years. A expert justifies the estimate.

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It is difficult to make budgetary projections in the current economic climate. In particular, a decision regarding long-range planning will be made, in part, using the likelihood that the current recession will last less than 1.5 years. To estimate this probability, information from all previous recessions in the United States has been gathered. Of the 18 ...

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