The Customs Inspection agency at international airports has developed a traveler profiling system (TPS) to detect passengers who are trying to bring more liquor into the country than is allowed by present regulations. Long-term studies indicate that 20% of the passengers are carrying more liquor than is allowed. Tests on the new TPS scheme has shown that of those carrying illegal amounts of liquor, 80% will be identified and subject to complete luggage search. In addition 20% of those not carrying illegal amounts of liquor will also be identified by TPS and subject to a complete luggage search.If a passenger is identified by TPS, what is the probability that the passenger is carrying an illegal amount of liquor? Comment on the value of this system.

The Customs Inspection agency at international airports has developed a traveler profiling system (TPS) to detect passengers who are trying to bring more liquor into the country than is allowed by present regulations. Long-term studies indicate that 20% of the passengers are carrying more liquor than is allowed. Tests on the new TPS scheme has shown that of those carrying illegal amounts of liquor, 80% will be identified and subject to complete luggage search. In addition 20% of those not carrying illegal amounts of liquor will also be identified by TPS and subject to a complete luggage search.If a passenger is identified by TPS, what is the probability that the passenger is carrying an illegal amount of liquor? Comment on the value of this system.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.12P

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