The Tastee Coffee Company is about to begin selling a new gourmet coffee. Company managers know that
Question:
The Tastee Coffee Company is about to begin selling a new gourmet coffee.
Company managers know that the probability the product will be profitable is 20 %. They also know that the probability that the test panel will like the product is 20 %. They also know from previous market research that when the product is profitable, there is a 60 % chance that their test panel liked the product and that when it is unprofitable, there is a 95 % chance that the panel did not like it. Using the Bayesian approach, find the probability that the gourmet coffee is profitable if the test panel liked the product.
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This is a classic problem for using Bayes theorem which allows us to update our prior beliefs in this case the prior probability that the coffee will ...View the full answer
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Related Book For 
Statistics For Business And Financial Economics
ISBN: 9781461458975
3rd Edition
Authors: Cheng Few Lee , John C Lee , Alice C Lee
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