1. Laid-off workers who become entrepreneurs because they cannot find meaningful

Question

1. Laid-off workers who become entrepreneurs because they cannot find meaningful employment with another company are known as entrepreneurs by necessity. A major national newspaper reports that these entrepreneurs by necessity are less likely to grow into large business than are entrepreneurs by choice. This article states that 88% of entrepreneurs in a certain area by choice and 12% are entrepreneurs by necessity. Only 5% of entrepreneurs by necessity expect their new business to employ 20 or more people within five years, whereas 17% of entrepreneurs by choice expect to employ at least 20 people within five years.

In an entrepreneur is selected at random and that individual expects that his or her new business will employ 20 or more people within five years, what is the probability that this individual is an entrepreneur by choice?

Explanation / Answer

probability that individual expects that his or her new business will employ 20 or more people within five years

=P( by choice and expect to employ 20 or more +by necessity and expect to employ 20 or more)

=0.88*0.17+0.12*0.05=0.1556

therefore probability that this individual is an entrepreneur by choice; given expects that his or her new business will employ 20 or more people within five years

=P(by choice and expect to employ 20 or more)/P(expect to employ 20 or more)

=0.88*0.17/0.1556=0.9614

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.