Scenario: NYC Restaurants-Part 5 In addition to the highest education level atta

Question

Scenario: NYC Restaurants-Part 5 In addition to the highest education level attained by the restaurant owner (where all owners in this sample have achieved either a high school diploma, bachelor's degree, or graduate degree)-you also collect bank loan data from your sample of 50 NYC restaurants. From this data you compile the following joint probability table: Bank Loan Amounts $50,000-$100,000 ! 0.08 0.10 $50,000 >$100,000 0.02 0.10 0.32 Education Bachelor's High School Level 0.14 0.08 Graduate

Explanation / Answer

Ans:

From above table:

P(>100 k )=0.02+0.06+0.08=0.16

P(high school)=0.1+0.08+0.02=0.2

P(high school and >100k)=0.02

We know that

P(A/B)=P(A and B)/P(B)

19)

P(>100 k/high school)=P(>100 k and high school)/P(high school)=0.02/0.2=0.100

Option b is correct.

20)

P(high school/>100k)=P(high school and >100 k)/P(>100 k)=0.02/0.16=0.125

Option c is correct.

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