View Full Version : Probability


summertigger
12-18-2005, 08:34 PM
The IRS says it will audit about 20 percent of all tax returns next year. What are the odds in favor of your being audited?

I cant find the formula that I would need for this problem, how can I solve it without knowing how many tax returns there are?

Thanks for your help

JohnM
12-18-2005, 08:54 PM
You've already been given the probability, which is 0.20, so you just need to convert the probability into odds.

Let A be the event that a return is audited.
Given P(A) = 0.20
Then A' is the event that a return isn't audited.
P(A') = 1 - P(A) = 1 - .20 = .80

Odds in favor = P(A) / P(A')
= .2/.8 = 1/4

Odds in favor = 1:4