Concept explainers
In Exercises 1–22, use Bayes’ theorem to calculate the probabilities.
Accident Rates An automobile insurance company has determined the accident rate (probability of having at least one accident during a year) for various age groups. (See Table 2.) Suppose that a policyholder calls in to report an accident. What is the probability that they are over 60?
Table 2
Age Group |
Proportion of Total Insured |
Accident Rate |
Under 21 21–30 31–40 41–50 51–60 Over 60 |
.05 .10 .25 .20 .30 .10 |
.06 .04 .02 .015 .025 .04 |
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