Assuming an oil-exploration company is

negotiating for rights to drill for oil in Tracts C and D, which are near each other. The company's

geological expert has estimated that the probability of finding oil at Tract C is 0.1. The expert has

also estimated that the conditional probability of oil at Tract D given oil at Tract C would be 0.4.

Finally, the expert has estimated that the conditional probability of oil at Tract D given no oil at

Tract C would be 0.02.

Question (1). Using the expert's probability assessments, compute the probability of oil at Tract

D, and then compute the conditional probability of oil at Tract C given oil at Tract D. (6 points)

Question (2). Suppose that the expert asserts that oil at Tract D is just as likely as oil at Tract C.

This assertion suggests that at least one of the expert's three assessments must be wrong. Suppose

that the expert feels quite confident about his estimate of the probability of C and his estimate of

the conditional probability of oil at D given oil at C. To be consistent with this new assertion, how

would he have to change the conditional probability of oil at D given no oil at C? (4 points)