10.1 For every 100 taxis in a dark alley, 15 will be green, 85 blue. The witness...

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10.1 For every 100 taxis in a dark alley, 15 will be green, 85 blue. The witness will identify 0.8(15) = 12 of the green taxis as green, the remaining 3 green taxis as blue; he will identify 0.8(85) = 68 of the blue taxis as blue, the remaining 17 blue taxis as green. The probability that the cab in question was green, given that the witness said it was, is thus equal to 12/(12 + 17) = 0.413 and as this is less than half, the Green Taxi Company should not be held liable. (LO1)

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Principles Of Microeconomics

ISBN: 9781264250387,9781264250448

8th Edition

Authors: Robert H. Frank , Ben Bernanke , Kate Antonovics , Ori Heffetz

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