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Preparing for the GMAT A company that offers courses to prepare students for the Graduate Management Admission Test (GMAT) has the following information about its customers: 20% are currently undergraduate students in business; 15% are undergraduate students in other fields of study; 60% are college graduates who are currently employed; and 5% are college graduates who are not employed. Choose a customer at random. (a) What’s the probability that the customer is currently an undergraduate? Which rule of probability did you use to find the answer? (b) What’s the probability that the customer is not an undergraduate business student? Which rule of probability did you use to find the answer?

Short Answer

Expert verified
(a) 35% using Addition Rule; (b) 80% using Complement Rule.

Step by step solution

01

Identify Relevant Figures

From the problem statement, we have the following customer distribution: 20% are undergraduate business students, 15% are undergraduate students in other fields, 60% are employed college graduates, and 5% are unemployed college graduates.
02

Calculate Total Undergraduate Probability

To find the probability that a customer is currently an undergraduate, we sum the probabilities of the two undergraduate categories: 20% (business) and 15% (other fields). So, the probability that a customer is an undergraduate is \(20\% + 15\% = 35\%\). This uses the Addition Rule of probability, which states that if two events are mutually exclusive, the probability of either event occurring is the sum of their probabilities.
03

Calculate Probability for Non-Business Undergraduate

For the probability that a customer is not an undergraduate business student, we need to calculate the complement of the event that the customer is a business undergraduate student. First, find the probability that a customer is a business student, which is 20%. Use the Complement Rule, which states that the probability of an event not occurring is \(1 - \) the probability of the event occurring. Thus, the probability a customer is not a business undergraduate is \(1 - 0.20 = 0.80\) or 80%.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Graduate Management Admission Test (GMAT)
The Graduate Management Admission Test, commonly known as the GMAT, is an assessment that evaluates the essential skills needed for success in graduate business programs. This test is a pivotal element for prospective students aiming to enroll in institutions to pursue an MBA or other graduate-level management degrees. The GMAT is designed to assess various capabilities, including analytical writing, quantitative reasoning, verbal reasoning, and integrated reasoning.

Preparing for the GMAT is crucial, as it often forms a prerequisite for admission into many prestigious business schools worldwide. Courses and materials are available to help students improve their scores, and understanding the demographic of students attending these preparation courses can offer insights into the test's wide reach.
Undergraduate Student Probability
Probability in statistics helps us measure the likelihood of different kinds of outcomes. When dealing with a probability question about students in a GMAT preparation course, it is essential to accurately identify different student categories.

In our context, undergraduate students are split into two categories: those studying business and those in other fields. To find the total probability of a customer being an undergraduate, these probabilities are added. This is known as the Addition Rule because these categories do not overlap; a student cannot simultaneously be in both categories. Therefore, the probability that a selected customer is an undergraduate is the sum of the percentages of undergraduate business students (20%) and students in other fields (15%), totaling 35%.
Addition Rule
The Addition Rule is a fundamental principle in probability that allows us to find the probability of either of two mutually exclusive events occurring. These events cannot happen at the same time. Hence, their probability is computed simply by adding their individual probabilities.

In practice, this rule means that to find the probability of selecting an undergraduate student from the course attendees, we add the probability of a student being a business undergraduate (20%) to the probability of a student being from another field of study (15%). Thus, by applying the Addition Rule, we determine that there is a 35% chance of randomly selecting an undergraduate student.
Complement Rule
The Complement Rule is a simple yet powerful concept in probability. This rule helps us determine the likelihood of an event not happening by focusing on its complement—the event that represents all outcomes that are not in the event itself. If the probability of an event occurring is known, we can find the probability of it not occurring by subtracting this from 1.

For example, if we wish to determine the probability that a customer is not an undergraduate business student, we identify the complement of the event where a customer is an undergraduate business student (which has a probability of 20%). The Complement Rule tells us that the probability of not being a business undergraduate is 1 minus this value: \[1 - 0.20 = 0.80\] resulting in an 80% probability.

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