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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › I need explanation of this
Hello, Sir!
I just need the explanation of this sentence:
“If there really is oil, there is 95% chance that the report will be favourable, but if there is no oil, there is only 10% chance that the report will indicate that there is oil.”
Can I understand it like this:
If the survey says that there is oil they are 95% right, and if they say that there is no oil then they are 90% right.
Thank you, and sorry for this silly question.
No – you cannot interpret it that way.
If there is oil, then there is a 95% chance that the survey says that there is oil, and a 5% chance that the survey says there is no oil.
If there is not oil, then there is a 90% chance that the survey says there is no oil, and a 10% chance that the survey says that there is oil.
To sort it all out, you need to know the probabilities of there being oil.