probability 1-z The probability of lemon squirting conditional upon recieving a positive signal is zp/(zp+(1-z(1-p)) There are actually four possible states of the world Signal, Lemon Signal, No Lemon No Signal, lemon No signal, no lemon (1) signal, no lemon, (2)signal, lemon, (3)no signal, no lemon, 4)no signal, lemon The probabilties of each of these states are(1)(1-z)(1-p),(2)Zp,(③3)z(1-p),(4) (1-z)pprobability 1-z. The probability of lemon squirting conditional upon recieving a positive signal is zp/(zp(1-z)(1-p)). There are actually four possible states of the world: Signal, Lemon Signal, No Lemon No Signal, Lemon No Signal, No Lemon (1) signal, no lemon, (2) signal, lemon, (3) no signal, no lemon, (4) no signal, lemon. The probabilties of each of these states are (1) (1-z)(1-p), (2) zp, (3) z(1-p), (4) (1-z)p