Two professors at a nearby university want to co-author a new textbook in either economics or statistics. They feel that if they write an economics book they have a 50% chance of placing it with a major publisher where it should ultimately sell about 40,000 copies.

If they can’t get a major publisher to take it, then they feel they have an 80% chance of placing it with a smaller publisher, with sales of 30,000 copies.

On the other hand if they write a statistics book, they feel they have a 40% chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies.

If they can’t get a major publisher to take it, they feel they have a 50% chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies.

What is the probability that the statistics book would wind up being placed with a smaller publisher?

The professors will only seek a smaller publisher if they cannot place the statistics book with a major publisher. If the probability of getting a major publisher is 40% and the probability of getting a smaller publisher is 50%, then the probability that the statistics book would wind up being placed with a smaller publisher is given by:

[tex]P=(1-P(major))*P(minor)\\P=(1-0.4)*0.5\\P=0.3[/tex]

The probability is 0.3 or 30%.