AE 15 ACTIVITY

Computation:
1. Joint probabilities
0.85 x .055 = 46.75%
0.15 x 0.55 = 8.25%
0.12 x 0.45 = 5.40%
0.88 x 0.45 = 39.60%

2. Probabilities of the survey based on the market

46.75% + 5.4% = 52.15%
8.25% + 39.6% = 47.85%

3. Posterior probabilities
46.75%/52.15% = 89.65%
5.4%/52.15% = 10.35%
8.25%/47.85% = 17.24%
39.6%/47.85 = 82.76%

Table 1 P(Survey | Market) Success Failure

Positive 85% 12%
Negative 15% 88%
Prior probability 55% 45%

Table 2 P(Survey | Market) Type of Market Joint Probability

Success Failure Success
Positive 85% 12% 46.75%
Negative 15% 88% 8.25%
P(Market | Survey) Prior Probability Posterior Probability
Success Failure Success
Positive 55% 45% 89.65%
Negative 55% 45% 17.24%

If the market survey is positive, the probability is 89.65% that the market is successful and 10.35% that the
failure. If the survey is negative, the probability is 17.24% that the market is successful and 82.76% that th
failure.
 Joint Probability P(Survey)
Failure
5.40% 52.15%
39.60% 47.85%
Posterior Probability Total
Failure
10.35% 100%
82.76% 100%

et is successful and 10.35% that the market is a

ket is successful and 82.76% that the market is a