Finding Gold in the Artic. A mining company is in negotiations for a contract in Northern Canada.

Preliminary geologic studies have computed the following probabilities for the site:

P(high-grade gold) = 0.50
P(low-grade gold) = 0.20
P(no gold) = 0.30



a. What is the probability of finding gold?

After exploring the first site, soil samples are taken noting the concentration of gold in soil. The probabilities of finding a particular type of soil identified by the sample are:

P(soil | high-grade gold) = 0.20
P(soil | low-grade gold) = 0.80
P(soil | no gold) = 0.20

b. How should the mining company interpret these samples? How would you revise probabilities (explain in plain English, step by step)? What is the new probability of finding gold? Would you make a bid to mine this particular site?