An investor is keeping a careful eye on the real estate markets in Las Vegas and

Question

An investor is keeping a careful eye on the real estate markets in Las Vegas and Florida. The following are her predictions for the real estate market in 2017.
• With 0.32 probability, foreclosures will increase in Las Vegas.
• With 0.46 probability, foreclosures will increase in Las Vegas or Florida.
• With 0.27 probability, foreclosures will increase in Las Vegas and Florida.

What is the probability that foreclosures will increase in Florida given that they increased in Vegas? Briefly discuss why.

Explanation / Answer

P( that foreclosures will increase in Florida | that they increased in Vegas)

=P(foreclosures will increase in Las Vegas and Florida)/P(foreclosures will increase in Las Vegas)= 0.27 /0.32=27/32

the second line of the sum is due to the definition of conditional probability. "|" sign in 1st line means the word 'given'.

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