Problem 2

A petroleum company is nearing the completion of drilling an oil well on a new location

that the company has leased. On the basis of geological reports, there is a 0.4 probability

that a formation of Type A lies beneath the well site, a 0.35 probability of a formation of

type B, and a 0.25 probability of type C formation. Company records show that oil is

discovered 20% of the time in type A formations, 40% in type B, and 30% in type C

formations.

What is the probability that:

(a) The well will produce oil?

(b) If the well is dry, a Type C formation lies beneath the well site?