Question

Paul’s boss told him that there is a 50% probability that his salary will increase next year, and a 25% probability that his bonus will increase. What is the probability that both will increase?

Answer 1

The probability of having the independent events, Bonus and Salary both increasing next year is 0.125

Probability of salary increase, P(Salary increase) = 0.5

Probability of bonus increase, P(bonus increase) = 0.25

The probability of both increasing next year can be expressed thus :

Since the probability of each event is independent ;

P(both increasing) = P(Salary increase) × P(Bonus increase)

P(Both increasing) = 0.5 × 0.25 = 0.125

Therefore, the probability of both bonus and salary both increasing next year is 0.125

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