econ 112 chap 5

cp continued examples

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dependent

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TD continued

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empirical concept

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event

a collection of one or more outcomes of an experiment

outcome

a particular result of an experiment

experiment

a process that leads to the occurrence of one and only one of several possible results. has two or more possible results, with uncertainty about which one will occur.

contingency

a table used to classify sample observations according to two identifiable categories or classes.

prior probability

The initial probability based on the present level of info

subjective probability

The likelihood of a particular event happening that is assigned by an individual based on whatever information is available.

independence

The occurrence of one event has no effect on the probability of the occurrence of another event.

multiplication formula

if there are m ways of doing one thing and n ways of doing another thing there m x n ways of doing both.

tree diagram

A diagram used to show the total number of possible outcomes

Probability

A number that describes how likely it is that an event will occur (value between zero and one) frequently expressed as a decimal such as .70, .27, or .50, or a percent such as 70%, 27%, or 50%. May also be reported as a fraction.

In a probability experiment, what is an outcome? Multiple choice question.

A particular result of the experiment.

posterior probability

A revised probability based on additional info

Bayes' Theorem

A theorem that enables the use of sample information to revise prior probabilities.

permutation

An arrangement, or listing, of objects in which order is important.

collectively exhaustive

Describes a set of events where at least one of the events must occur during an experiment.

Special Rule of Addition

If two events A and B are mutually exclusive, the probability of one or the other event's occurring equals the sum of their probabilities P(A or B) = P(A) + P(B)

Special Rule of Multiplication

P(A and B) = P(A)P(B) for three independent events, A, B, C< the special rule of multiplication is used to determine the probability that all three events will occur is: P(A and B and C) = P(a) p (b) p (c)

General Rule of Multiplication

P(A and B) = P(A)P(B|A)

Conditional Probability

The probability of a particular events occurring, given that another event has occurred.

empirical probability

The probability of an event happening is the fraction of the time similar events happened in the past.

mutually exclusive

Two events that cannot occur at the same time

Classical Probability

based on the assumption that the outcomes of of an experiment are equally likely.

remote

distant

event

multiples outcomes of an experiment

Permutation Formula

n! / (n - k)! where n is the number of things to choose from, and we choose k of them (no repetition, order matters)

combination formula

nCr = n!/r!(n-r)! (order does not matter)

Law of Large Numbers

over a large number of trials, the empirical probability of an event will approach its true probability.

outcome

the one and only result of an experiment.

odds

the probability of a specified outcome