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Hi john, there is an example in bpp as follows-
Suppose that a company is trying to decide whether or not to drilll on a particular site. The chief engineer has estimated that there is a 20 percent chance of oil and 80 percent of chance the oil will not be present.it is possible for them to hire a international consultant who will survey the site and the company has estimated thar if there really is oil, there is a 95% chance the report will be favourable. But if there is no oil, then there is a 10% chance that the report will indicate oil .
The solution is that –
THat there is 20% chance of oil and 80 of notAnd then they say, that the probability, that if there is oil the report will say there is oil (0.95) and there is no oil (0.05) and then the find the probabilities which are 0.704 and 0.296
I dont understnad this as isnt the 95% percent probability of the report being favourable and thus 95% chances of there being OIL
Imagine we checked for oil 100 times.
20 of those times there is oil, and 80 of those times there is not oil.
On the 20 times there is oil, then the survey will say 95% x 20 = 19 times that there is oil.
Of the 80 times there is not oil, then the survey will say 10% x 80 = 8 times that there is oil.So of the 19 + 8 = 27 times that the survey says there is oil, in fact there will only be oil on 20 of those times. So the probability of their being oil when the survey says there will be oil is 20/27 = 0.704
(It is very unlikely that the examiner will ask this sort of thing in the exam)
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