Jason inherited a piece of land from his great-uncle. Owners in the area claim that there is a 45% chance that the land has oil. Jason decides to test the land for oil. He buys a kit that claims to have an 80% accuracy rate of indicating oil in the soil. What is the probability that the land has oil and the test predicts it? Show solution.
P ( A ) = 0.45 - probability that the land has oil, P ( B ) = 0.8 - probability that the test predicts it P ( A ∩ B ) = P ( A ) · P ( B ) = 0.45 · 0.8 = 0.36 Answer: The probability that the land has oil and the test predicts it is 36 %.
