Math Problem Statement
The probability that an individual without a college education earns more than $100,000 is 0.2, whereas the probability that a person with a B.S. or higher degree earns more than $100,000 is 0.6. The probability that a person chosen at random has a B.S. degree is 0.2. What is the probability that a person has at least a B.S. degree if it is known that he or she earns more than $100,000? (Round your answer to four decimal places.)
Solution
To solve this, we use Bayes' Theorem. Let’s define the events:
- : The person has at least a B.S. degree.
- : The person earns more than $100,000.
We are tasked to find , the probability that a person has at least a B.S. degree given that they earn more than $100,000.
Bayes' Theorem Formula:
Step 1: Determine , , and
- (Probability of having at least a B.S. degree).
- (Probability of earning more than $100,000 given at least a B.S. degree).
- (Probability of earning more than $100,000 without a B.S. degree).
Here, is the complement of , meaning the person does not have a B.S. degree. The probability of not having a B.S. degree is:
Step 2: Calculate (Total probability of earning more than $100,000)
Using the law of total probability, is given by: Substituting values:
Step 3: Apply Bayes' Theorem
Now, substitute into Bayes' formula:
Final Answer:
The probability that a person has at least a B.S. degree given that they earn more than $100,000 is approximately:
Would you like a detailed explanation or further breakdown? Here are 5 related questions to consider:
- How does Bayes' Theorem apply in other real-world situations involving conditional probabilities?
- What if the probabilities of earning more than $100,000 were switched—how would that affect the result?
- How does the law of total probability help in breaking down complex problems?
- What is the significance of complementary probabilities like in such problems?
- How would the result change if increased to 0.5?
Tip: Always ensure that probabilities in such problems sum up correctly across all possible events to avoid logical inconsistencies.
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Math Problem Analysis
Mathematical Concepts
Probability
Conditional Probability
Bayes' Theorem
Formulas
Bayes' Theorem: P(A|B) = (P(B|A) * P(A)) / P(B)
Law of Total Probability: P(B) = P(B|A) * P(A) + P(B|A^c) * P(A^c)
Theorems
Bayes' Theorem
Law of Total Probability
Suitable Grade Level
Grades 11-12, College Level
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