-Consider the Oil Drilling Game Depicted in Figure 16

Multiple Choice

-Consider the Oil Drilling Game depicted in Figure 16.5. PETROX must decide whether to purchase a lease to drill for oil. Based on preliminary surveys, PETROX knows that there is an 80 percent chance that there is no oil (NO) and a 20 percent probability that oil is present (O) . PETROX decides to conduct seismic surveys. The probability that the survey is negative when oil is present is P(!*O) = 0.5. The probability that there the survey is positive when no oil is present is P(+*NO) = 0.5. Payoffs are in millions of dollars. What is the probability that PETROX will strike oil when the seismic surveys indicate that oil is present?

A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent
E) 50 percent