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Statistical Probability Tree

Your firm is planning a new style of advertising and figures that the probability of increasing the number of customers is 0.63, while the probability of increasing sales given an increase in the number of customers is 0.651. Also assume that when there is no increase in the number of customers, there is no way that you'll be able to increase the sales.

a) draw a probability tree from this situation.
b) find the probability of increasing both sales and customers.
c) if sales increase, what is the probability that the number of customers increases?
d) if sales do not increase, what is the probability that the number of customers increases?
e) find the probability that neither customers not sales increase.

See attached file for full problem description.

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Increasing advertising
/
more customers no more customers
p = 0.63 p = 1 - 0.63 = 0.37
/ /
more sales no more sales more sales no more sales
p = 0.651 p = 1 - 0.651 = 0.349 p = 0 p = 1

0.41013 0.21987 0 0.37

a) The probability tree is above. I made it using the probabilities ...

Solution Summary

The solution gives the probability tree and demonstrates how to use it to answer the questions in the problem.

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