An economist predicts that over the next year, there is a 60% probability that oil prices will fall slightly and a 20% probability that new estate tax legislation will be enacted. According to this prediction, the probability that at least one of these independent events will occur is closest to: A. 12% B. 40% C. 68% D. 80%

1 - .32 = .68

isnt the formula for OR probabilities x * y? what am i missing here cpk?

CPK how do you get 1-.32=.68. It is the right answer, but I .do .6+.2 - (.6*.2)=.68

aha i gotcha now, i read the question wrong.

I answered incorrectly at 80%, D. Why do we subtract (0.6 * 0.2). The question asks the probability of at least one of the events happening. At least should mean one or both, so why do we subtract the probability of both? Maybe I’m just missing something here because of too much studying lately.

I did it as 1 - (1-.6)(1-.2) --> Probability of neither event occurring. because these are mutually exclusive events. which if you expand becomes 1 = (1-.8+.12) = .8 - .12 (same as your .6 + .2 - .6 * .2)

moto, draw a venn - then you’ll see. you have both the events occurring being counted twice in each circle.

Correct cpk, but just a little correction: they are indep events, not mutually exclusive, which allows us to do the multiplication. P(Oil down slightly) = P(A) = 0.6 P(New Tax) = P(B) = 0.2 P(Atleast A or B occurs) = 1 - P(Neither A or B) = 1 - [P(Not A)*P(Not B)] = 1 - (0.4)*(0.8) =0.68 We can do this multiplication because A and B are independent

oops, my bad, you were referring to the event happening or not happening (oil down, or oil not down), so that bit IS mutually excl.