Call a household prosperous if its income exceeds $300,000. Call the household e

Question

Call a household prosperous if its income exceeds $300,000. Call the household educated if the householder completed college. Select an American household at random, and let A be the event that the selected household is prosperous and B the event that it is educated. According to the Current Population Survey, P(A) = 0.102, P(B) = 0.234, and the probability that a household is both prosperous and educated is P(A and B) = 0.061. What is the probability P(A or B) that the household selected is either prosperous or educated?

Explanation / Answer

If we are not mutually exclusive, we have to take away the probability of both A and B happening. So P(A or B) is P(A) + P(B) - P(A and B)=0.102+0.234-0.061=0.275

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