According to the Internal Revenue Service (IRS), the chances of your tax return being audited are about 6 in 1,000 if your income is less than $50,000; 10 in 1,000 if your income is between $50,000 and $99,999; and 49 in 1,000 if your income is $100,000 or more (Statistical Abstract of the United States: 1995). If two taxpayers with incomes under $50,000 are randomly selected and two with incomes more than $100,000 are randomly selected, what is the probability that none of these taxpayers will be audited by the IRS?

The probability that none of these taxpayers will be audited by the IRS is 0.8996 or 89.36%

Step-by-step explanation:

According to given:

Probability of being audited for income less than $50,000 = 6/1000 = 0.006

Therefore,

Probability of not being audited for income less than $50,000 = 1 - 0.006 = 0.994

Similary,

Probability of being audited for income more than $100,000 = 49/1000 = 0.049

Therefore,

Probability of not being audited for income more than $100,000 = 1 - 0.049 = 0.951

Now, for the probability of 2 persons with less $50,000 income and 2 persons with more than $100,000 income, to not being audited, we must multiply the probabilities of not being audited of each of the 4 persons.

Therefore,

Probability that none of them is audited = (0.994) (0.994) (0.951) (0.951)

Probability that none of them is audited = 0.8936 = 89.36%