How to use decision tree to calculate the probability of an event? Suppose there is a good which is estimated to have 60% chance of high demand, and 40% chance of low demand. I have a possibility to make a market study to predict the nature of demand of a good. The good has either high demand, or low demand. In the past, these studies have been know to **predict a high demand in 95% of the cases where a high demand has actually been observed**. **Also, a high demand has been predicted in 15% of the cases where a low demand has actually been observed.** I'm at a lost here; how do I make any sense of this? What's the deal here...

The common terms for the bold concepts are _true positive_ and _false positive_ , respectively. According to the first statement, given that the good has a high demand, the studies predict with a 95% chance of correctness (true positive). The second statement says that given the good has a low demand, the studies predict incorrectly with a 15% chance (false positive).

Although there is no direct question in your problem, I hope this paraphrases it well enough.