QUESTION 2 [10]
The following joint probability table shows the information for a sample of 200 companies
with one variable indicating the industry and the other variable indicating the sector in
which a company is operating:
Sector
Industry
Retail Financial
Formal 0.03. 0.24
Informal 0.17. 0.56
a) If it is known that a company is in the financial industry, what is the probability that
it operates in the informal sector? (3)
b) If it is known that a company is not in the financial industry, what is the probability
that it operates in the informal sector? (4)
c) What conclusion can be drawn by comparing the answers in a) and b)
Answers
Given : joint probability table shows the information for a sample of 200 companies with one variable indicating the industry and the other variable indicating the sector in which a company is operating:
To find : Probabilities in different cases
Solution:
Retail Financial Total
Formal 0.03. 0.24 0.27
Informal 0.17. 0.56 0.73
Total 0.2 0.8 1.00
a) If it is known that a company is in the financial industry,
=> probability that it operates in the informal sector = 0.56/0.8
= 0.7
b) If it is known that a company is not in the financial industry, what is the probability that it operates in the informal sector = 0.17/0.2
= 0.85
informal Sector is more in retail industry ( non - financial industry )
Additional info :
Retail Financial Total
Formal 6. 48 54
Informal 34. 112 146
Total 40 160 200
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