CHAPTER 2 PROBABILITY CONCEPTS AND APPLICATIONS time the model predicted a failu

Question

CHAPTER 2 PROBABILITY CONCEPTS AND APPLICATIONS time the model predicted a failure. For the restau- rants that were not successful, when the mathemati- cal model was applied, 20% of the time it incorrectly predicted a successful restaurant while 80% of the time it was accurate and predicted an unsuccessful restaurant. If the model is used on a new location and predicts the restaurant will be successful, what is the probability that it actually is successful? A mortgage lender attempted to increase its business by marketing its subprime mortgage Thi

Explanation / Answer

resturents that ere not sucessfull

the model 20% of time incorrectly predicted it successful

80% of the time it was accurate and predicted an unsuccessful resturant.

Model predicted predicts the resturant is succesfull

probability that is actually sucessful = 0.8 (as 80% of the time it correctly predicts)

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