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Twelve percent of all U.S. households are in California. A total of 1.3 percent of all U.S. households earn more than \(250,000 per year, while a total of 3.3 percent of all California households earn more than \)250,000 per year

(a) What proportion of all non-California households earn more than \(250,000 per year?

(b) Given that a randomly chosen U.S. household earns more than \)250,000 per year, what is the probability it is a California household

Short Answer

Expert verified

The proportion of all non-California households earning more than $250,000 per year is=0.01027

The probability is a California household=0.3046

Step by step solution

01

Given information (part a)

The object is to calculate the proportion of all non-California households earning more than $250,000per year using the given information. 12%of all U.S. households are in California and 1.3%of all U.S. households earn more than $250,000per year. Also,3.3%all California households earn more than$250,000 per year.

02

Conditional probability expression (Part a)

The proportion of all U.S. households earn more than $250,000per year is

P(>250K)=1.3100

The proportion of households in California is P(C)=12100

03

Final answer (Part a)

The proportion of all non-California households earning more than$250,000per a year is P(>250KC)

The proportion of all U.S. households earning more than $250,000per year can be shows using the BAYES's formula as

P(>250K)=P(C)P(>250KC)+P(C)P(>250KC)

Put the values and simplify to get the proportion of all non-California households earning more than$250,000

1.3100=121003.3100+88100P(>250KC)

0.013=[0.120.033]+[0.88P(>250KC)]

P(>250KC)=0.013-0.003960.88

=0.01027

The proportion of all non-California households earning more than per year is0.01027

04

Given information (part b)

We have to give that a randomly chosen U.S. household earns more than $250,000per year, then the probability it is a California household isP(C>250K)

05

Conditional probability  expression (Part b)

We have the conditional probability, the eventP(C>250K)can be expressed as

P(C>250K)=P(C>250K)P(>250K)

=P(C)P(>250KC)P(>250K)

Substitute and simplify values to get the required probability.

Given that a randomly chosen U.S. household earns more than$250,000per year, then the probability it is a California household is

P(C>250K)=P(C)P(>250KC)P(>250K)

=121003.31001.3100

=0.3046

06

Final answer (part b)

Finally we get at given randomly chosen U.S. household that earns more than $250,000per year, then the probability it is a California household is 0.3046

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