Suppose you know the following probabilities that describe the reliability of a macroeconomic forecasting firms past performance:
Question:
Suppose you know the following probabilities that describe the reliability of a macroeconomic forecasting firm’s past performance:
The probability of a positive forecast given a good macroeconomy is 0.60.
The probability of a negative forecast given a good macroeconomy is 0.40.
The probability of a positive forecast given a bad macroeconomy is 0.25.
The probability of a negative forecast given a bad macroeconomy is 0.75.
Suppose your prior probability of a good macroeconomy is 0.10. Find the probability of a good macroeconomy given that the forecast is for a good macroeconomy and the probability of a bad macroeconomy given that the forecast is for a bad macroeconomy.
Step by Step Answer:
Managerial Economics A Mathematical Approach
ISBN: 9781118091364
1st Edition
Authors: M. J. Alhabeeb, L. J. Moffitt