Determine the probability of a favorable market survey

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A company is considering producing a new children's bar soap. A market research firm has told the company that if they perform a survey the successful production of a favorable market occurs 65 percent of the time. That is, P(positive survey?favorable market) = 0.65. Similarly, 40 percent of the time the survey falsely predicts a favorable market; thus, P(positive survey?unfavorable market) = 0.40. These statistics indicate the accuracy of the survey. Prior to contacting the market research firm, the company's best estimate of a favorable market was 50 percent. So, P(favorable market) = 0.50 and P(unfavorable market) = 0.50. Using Bayes' theorem, determine the probability of a favorable market given a favorable survey.

Reference no: EM13202551

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