Suppose that an insurance company classifies peopleinto
Chapter 3, Problem 3.50(choose chapter or problem)
Suppose that an insurance company classifies peopleinto one of three classes: good risks, averagerisks, and bad risks. The companys records indicatethat the probabilities that good-, average-, andbad-risk persons will be involved in an accidentover a 1-year span are, respectively, .05, .15, and.30. If 20 percent of the population is a good risk,50 percent an average risk, and 30 percent a badrisk, what proportion of people have accidents ina fixed year? If policyholder A had no accidentsin 1997, what is the probability that he or she is agood or average risk?
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