Problem Solving

Hi,

I disagree with kaplan s explanation

Among a group of 2500 people,
35% in invest in municipal bonds, 18% invest in oil stock
and 7% invest in both municipal bonds and oil stock
if 1 person is to be randomly selected from the 2500people
What is the probability that the person selected will be one who invests in municipal bonds but not in oil stocks??

Answer is 7/25

They took 2500 *35%=875 invest in bond
2500*7% both in bonds and oil = 175
then they sub 875 - 175 = 700 why ???

francoisph wrote:Hi,

I disagree with kaplan s explanation

Among a group of 2500 people,
35% in invest in municipal bonds, 18% invest in oil stock
and 7% invest in both municipal bonds and oil stock
if 1 person is to be randomly selected from the 2500people
What is the probability that the person selected will be one who invests in municipal bonds but not in oil stocks??

Answer is 7/25

They took 2500 *35%=875 invest in bond
2500*7% both in bonds and oil = 175
then they sub 875 - 175 = 700 why ???

The question system asks the probability of selecting a person from municipal stocks alone

Municipal stocks alone = total municipal stocks (2500*35%) - ((both municipal stocks - oil bonds) (i.e. 2500*7%)

HTH!

2500
bonds=2500*0.35=875
oil=2500*.18=450
bonds+oil=2500*0.07=175

venn diagram

only bonds=700
bonds+oil=175
only oil=275

700/2500
=7/25

Another approach I used:

since 35% in munis and 18% in oil and 7% common, hence only munis = 35 - 7 = 28%. We know that total 28 out of 100 people invested in munis, which means = 28/100 = 7/25. I think the 2500 number is superfluous.

Am I missing something, thanks.

Answering 7/25 is fine when the question is "What is the probability that the person selected will be one who invests in municipal bonds "

but if the question is

"
What is the probability that the person selected will be one who invests in municipal bonds but not in oil stocks??"

Answer = probability of person selecting municipal bonds * probability of person not selecting oil stocks.
venn diagram

only bonds=700
bonds+oil=175
only oil=275

so Answer will be 700/2500 * (2500-275)/ 2500 = 623/2500

Am i crazy????
Please correct and suggest me..

Thanks,
Murali

ANSWER is 700/2500
=7/25