Consider an economy in which the overall unemployment rate is 18%. Moreover, 20%
ID: 2965242 • Letter: C
Question
Consider an economy in which the overall unemployment rate is 18%. Moreover, 20% of individuals are college graduates, and 2% of all individuals are unemployed college graduates. a) if I pick a college graduate at random, what is the probability that he or she is unemployed? b) If I pick a person at random from those who are not college graduates, what is the probabiliyu that he or she is unemployed? c) if I pick an unemployed person at random, what is the probability that he or she is a college graduate? Please briefly explain your answer, thanks!
Explanation / Answer
(a) Unemployment in college grad = 2/20 =10%
(b) Let N=total population
18/100*N = 10/100*20/100*N + x*80/100*N
=> 18= 2 + 80x
=> x = 16/80 = 0.2
Prob = 0.2
(c) P(C | U) = P(U|C)P(C) + P(U|NC)P(NC)
= 0.1*0.2 + 0.2*0.8
= 0.18