an oil exploration company is trying to determine, whether or not to drill for oil in a particular location. their geologists give the following probabilities: there is a 20% probability that they will get a gusher and earn $20,000,000 there is a 45% probability they will earn $8,000,000 otherwise they will lose their 10,000 inves
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
an oil exploration company is trying to determine, whether or not to drill for oil in a particular location. their geologists give the following probabilities:
- there is a 20%
probability that they will get a gusher and earn $20,000,000 - there is a 45% probability they will earn $8,000,000
- otherwise they will lose their 10,000 investment
Make up a probability distribution for this drilling prospect.
find the expected value
if you were the CEO of the company, would you drill? Explain briefly.
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