Question

Question
A company is considering producing some new Gameboy electronic games. Based on past records, management believes that there is a 70 percent chance that each of these will be successful and a 30 percent chance of failure. Market research may be used to revise these probabilities. In the past, the successful products were predicted to be successful based on market research 90 percent of the time. However, for products that failed, the market research predicted these would be successes 20 percent of the time. If market research is performed for a new product, what is the probability that the results indicate a successful market for the product and the product is actually not successful?

Answer 1

The probability that the results indicate a successful market for the product and the product is actually not successful is P=0.77.

What is the probability?

Probability refers to a possibility that deals with the occurrence of random events.

Events are given:

S: success

F: failure

MS: market research forecast a success

MF: market research forecast a failure

we have given:

P(S)=0.70

P(F)=0.30

P(S | MS)=0.90

P(F | MS)=0.20

we can derive that P(F | MF)=0.80.

We also can conclude that P(S | MF)=0.10.

We can calculate the probability of having a forecast of a failure,

$P(MF | F) =\dfrac{ P(F | MF)P(F)}{ P(F | MF)P(F) + P(S | MS)P(S) }$

P (MF | F) = 0.24 / 0.31

P (MF | F) = 0.77

The probability that the results indicate a successful market for the product and the product is actually not successful is P=0.77.

Learn more about probability here;

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