40 Chapter2 Probability oe : 3 $20 that it will succeed), the probability is = = 0.6 that the business venture will succeed. Show that if subjective probabilities are determined in this way, they satisfy (a) Postulate 1 on page 30; (b) Postulate 2. See also Exercise 2.82. 2.6 CONDITIONAL PROBABILITY Difficulties can easily arise when probabilities are quoted without specification of the sample space. For instance, if we ask for the probability that a lawyer makes more than $50,000 per year, we may well get several different answers, and they may all be correct. One of them might apply to all those who are actively engaged in the practice of law, and so forth. Since the choice of the sample space (that is, the set of all possibilities under consideration) is by no means always self-evident, it often helps to use the symbol P(4|S) to denote the conditional probability of event A relative to the sample space 5 or, as we also call it, “the probability of A given 5.” The symbol P(A|S) makes it explicit that we are referring to a particular sample space S, and it is preferable to the abbreviated notation P(A) unless the tacit choice of S is clearly understood. It is also preferable when we want to refer to several sample spaces in the same example. If-A is the event that a person makes more than $50,000 per year, G is the event that a person is a law school graduate, L is the event that a person is licensed to practice law, and E is the event that a person is actively engaged in the practice of law, then P(A|G) is the probability that a law school graduate makes more than $50,000 per year, P(AIL) is the probability that a person licensed to practice law makes more than $50,000 per year, and P(A|E) is the probability that a person actively engaged in the practice of law makes more than $50,000 per year. Some ideas connected with conditional probabilities are illustrated in the following example. EXAMPLE 2.15 ‘A consumer research organization has studied the services under warranty provided by the 50 new-car dealers in a certain city, and its findings are summarized in the following table. Good service Poor service under warranty under warranty In business 10 years or more 16 4 In business less than 10 years 10 20 Ifa person randomly selects one of these new-car dealers, what is the probability that he gets one who provides good service under warranty? Also, if a person randomly selects one of the dealers who has been in business for 10 years or more, what is the probability that he gets one who provides good service under warranty?