A company is considering producing a new product Based on pa

A company is considering producing a new product. Based on past records, management believes that there is a 70 percent chance that the new product will be successful, and a 30 percent chance it will not be successful. Market research may be used to revise these probabilities. In the past, given the product was succesful, 90 percent of the time the market research was used. However, of the products that were not successful, 20 percent of the time market research was used. If market research is not performed for a new product, what is the probability that the product is actually successful? 0.690 0.630 0.913 0.70 0.2258

Solution

New product -- Successful 70%

Not successful 30%

Market research -- used for successful products 90%

not used for successful products 20%

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Market research not performed for new product. Hence it comes under 20% of successful when market research not used

The probability is simply 70% or 0.70