ABC Auto Insurance classifies drivers as good, medium, or poor risks. Drivers wh
ID: 3382973 • Letter: A
Question
ABC Auto Insurance classifies drivers as good, medium, or poor risks. Drivers who apply to them for insurance fall into these three groups in the proportions 30%, 50%, and 20%, respectively. The probability a “good” driver will have an accident is .01, the probability a “medium” risk driver will have an accident is .03, and the probability a “poor” driver will have an accident is .10. The company sells Mr. Brophy an insurance policy and he has an accident. What is the probability Mr. Brophy is: A. A good driver? B. A medium risk driver? C. A poor driver?
Explanation / Answer
ABC Auto Insurance classifies drivers as good, medium, or poor risks. Drivers wh