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of foreign tourists who travel to Canada and the United States The primary focus of Safe Trip is to act as an interface between local health care providers and the overseas insurance company that insured the tourist should the traveller find him or herself in need of medical attention Currently Safe Trip considers increasing the processing fee collected partly from medical providers and partly from the foreign insurers Although this would generate additional revenue it would also incur the risk of losing contracts with insurers and health care providers The Safe Trip estimates of the impact of the change in rates on the annual profit in millions depending on where from most of the tourists come According to the company s research the probability of most tourists coming not from Europe is about 0 39 and the probability of most tourists coming from Europe is approximately 0 61 Suppose that Safe Trip has decided to hire a professional analyst who will provide additional information about number of potential tourists from Europe Based on the analyst s past record the company has estimated 0 74 probability that the analyst would present a favorable report given most of the tourists come from Europe and 0 94 probability that the analyst would present an unfavorable report given not most of the tourists come from Europe a If the analyst provides a favorable report how then would the Safe Trip estimate the probability of most tourists coming from Europe Find the answer using the following revised probability table Please round the values of joint posterior probabilities and probability of favorable report to four decimal places State of Nature not Europe Europe Probability Revisions given a Favorable Report State of Nature Prior Conditional Probability Joint Posterior Probability Probability P Fav State of Nature Probability P State of Nature Fav P Most of the tourists come from Europe Favorable report not Europe Europe P Favorable report b If the analyst provides an unfavorable report how then would the Safe Trip estimate the probability of most tourists coming from Europe Find the answer using the following revised probability table Please round the values of joint posterior probabilities and probability of unfavorable report to four decimal places 1 0000 Probability Revisions given an Unfavorable Report Conditional Probability Joint Posterior Probability Prior Probability P Unfav State of Nature Probability P State of Nature Unfav P Unfavorable report 1 0000

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