An oil company purchased an option on land in Alaska. Preliminary geologic studies assigned the following prior probabilities.
P(high-quality oil) = 0.45
P(medium-quality oil) = 0.15
P(no oil) = 0.40
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) = 0.20
P(soil medium-quality oil) = 0.75
P(soil no oil) 0.20
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)?
