Question

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

P( High quality oil)=0.3

P( medium quality oil)=0.5

P(No oil)=0.2

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

b. After 200 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)=.4

P (Soil | medium- Quality Oil)=.5

P (Soil | No Oil)=.1

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

P (High- Quality Oil | Soil )=
P (Medium- Quality Oil | Soil )=
P (No Oil | Soil )=

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

Answer 1