Business, 25.02.2020 16:56 sydneydavis57

An oil company purchased an option on land in Alaska. Preliminary geologic studies assigned the following prior probabilities.

P(High-quality oil) = 0.4

P(Medium-quality oil) = 0.4

P(No-oil) = 0.2

a. What is the probability of finding oil (to 1 decimal)?

b. After feet of drilling on the first well, a soil test is taken. The probabilities of finding the particular type of soil identified by the test are given below.

P(soil | High-quality oil)= 0.3

P(soil | Meduim-quality oil) = 0.5

P(soil | No-oil) = 0.2

Given the soil found in the test, use Bayes' theorem to compute the following revised probabilities (to 4 decimals).

What is the new probability of finding oil (to 4 decimals)?

According to the revised probabilities, what is the quality of oil that is most likely to be found?

- Select your answer -High quality Medium quality No oilItem

Answers: 2

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An oil company purchased an option on land in Alaska. Preliminary geologic studies assigned the foll...

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