Step 1: Find \( P(A \cap B) \)
\[ P(A \cap \overline{B}) = P(A) - P(A \cap B) \]
\[ 0.5 = 0.7 - P(A \cap B) \]
\[ P(A \cap B) = 0.2 \]
Step 2: Calculate \( P(A \cup \overline{B}) \)
Using probability rules:
\[ P(A \cup \overline{B}) = P(A) + P(\overline{B}) - P(A \cap \overline{B}) \]
\[ = 0.7 + (1 - 0.4) - 0.5 \]
\[ = 0.7 + 0.6 - 0.5 = 0.8 \]
Step 3: Find \( P(B \cap (A \cup \overline{B})) \)
\[ P(B \cap (A \cup \overline{B})) = P((B \cap A) \cup (B \cap \overline{B})) \]
\[ = P(A \cap B) + P(\emptyset) = 0.2 + 0 = 0.2 \]
Step 4: Compute conditional probability
\[ P(B | A \cup \overline{B}) = \frac{P(B \cap (A \cup \overline{B}))}{P(A \cup \overline{B})} = \frac{0.2}{0.8} = \frac{1}{4} \]