# Calculating Probabilities

I need help with the following questions. Please show your work so I can practice with other problems.

Thank you

An oil company purchased an option on land in Oklahoma. Preliminary studies assigned the follwing prior probabilities.

P(high-quality oil) = .50

P(medium-quality oil) = .20

P(no oil) = .30

a. What is the probablility of finding oil?

b. After 200 feet of drilling on the first well, a soil test is made. The probabilities of finding the particular type of soil identified by the test are:

P(soil/high-quality oil) = .20

P(soil/medium-quality oil) = .80

P(soil/no oil) = .20

a. How should the firm interpret the soil test?

b. What are the revised probabilities, & what is the new probability of finding oil?

Thanks again.

© BrainMass Inc. brainmass.com June 3, 2020, 6:16 pm ad1c9bdddfhttps://brainmass.com/statistics/probability/53400

#### Solution Preview

Please see the attached file for a better formatted solution

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

P(high-quality oil) = .50

P(medium-quality oil) = .20

P(no oil) = .30

a. What is the probability of finding oil?

Since we only have ...

#### Solution Summary

The solution is in a word document format that shows step by step calculation of the probabilities