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Mutually exclusive projects occur when projects are independent. True False

Question:

Mutually exclusive projects occur when projects are independent.

True

False

Mutually Exclusive Events:

In statistics, two events are said to be mutually exclusive when they cannot happen at the same time. In this case, the joint probability of the events is the product of the probability of each individual event.

Answer and Explanation:

The statement is false.

Two projects are mutually exclusive when accepting one project necessarily means giving up the other one, i.e., they cannot be implemented at the same time. This could occur when there is limited resources, such as capital. So a firm cannot finance both projects simultaneously.

Being independent is not a sufficient nor necessary condition for mutual exclusivity. For example, if a firm has enough capital to fund two independent projects, then the two projects are not mutually exclusive.


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Mutually Exclusive Events & Non-Mutually Exclusive Events

from 6th-8th Grade Math: Practice & Review

Chapter 48 / Lesson 5
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