An oil company purchased an option on land in alaska


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

953_Oil.png

a. What is the probability of finding oil?

b. After 200 feet of drilling on the first well, a soil test is taken. The probabilities of find-ing the particular type of soil identified by the test follow.

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How should the firm interpret the soil test? What are the revised probabilities. and what is the new probability of finding oil?

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Engineering Mathematics: An oil company purchased an option on land in alaska
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