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An oil company purchased an option of land in Alaska. Preliminary geologic studies assigned the following prior probabilities.
P(high qualith oil) = 0.60
P(medium quality oil) = 0.20
P(no oil) = 0.20

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 finding the particular type of soil identified by the test follow:
P ( soil | high quality oil) = .20
P(soil | medium-quality ) = 0.80
P(soil | no oil) = 0.20
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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