Chapter 4 -1 Flashcards
What is the definition of probability and what are the prob values assigned
- A numerical measure of the likelihood that an event will occur
- Can be used as measures of the degree of uncertainty
- Probability values are always assigned on a scale of 0 to 1
What are probability values always assigned on a scale of and explain those numbers
Probability of 1 = The event is almost certain to occur
Probability of -5 = The event is just as likely as unlikely to occur
Probability of zero = The event is unlikely to Occur
Define experiment
A process that generates well defined outcomes
Define sample space
The set of all experimental outcomes
Define sample point
An experimental outcome
What are the three useful accounting rules
- Multistep experiments
- Combinations
- Permutations
Explain a multi step experiment
If an experiment can be described as a sequence of key steps with N possible outcomes on the first step and n possible outcomes on the second step and so on
Total number of experimental outcomes is given by
Define combinations
Allows us to count the number of experimental outcomes when the experiment involves selecting n objects for a set of N objects
What is the formula for multi step experiments
Add
What is the formula for combinations
Add
What does zero factorial equal
0!
1
For combinations does order matter or does it not matter
Order does not matter
Explain permutations
Allows us to compute the number of experimental outcomes when n Objects are to be selected from a set of N Objects
Order matters
The same n Object selected in a different order are considered different experimental outcomes
Which counting rule results in more outcomes?
Permutations
Because every Selection of n Objects can be ordered in n! Different ways
What is the formula for permutations
Add
What are the three most used approaches for assigning probabilities
- The classical method
- The relative frequency method
- The subjective method
What two basic requirements are needed for assigning probabilities
- The probability assigned to each experimental outcome must be between zero and one inclusively
- The sum of probability for all experimental outcomes must equal 1.0
Defined the classical method for assigning probabilities
- When would you use it
- Are basic requirements satisfied
- Provide an example
- It’s used when all experimental outcomes are equally likely
- Two basic requirements are satisfied automatically
- Example tossing a coin
Defined the Relative frequency method for assigning probabilities
- When would you use it
- Are basic requirements satisfied
- Provide an example
- Use when data are available to estimate the proportion of time the experimental outcome will occur if the experiment is repeated a large number of times
- Two basic requirements are automatically satisfied
Defined the Subjective method for assigning probabilities
- When would you use it
- Are basic requirements satisfied
- Provide an example
Use when: We cannot realistically assume that the experimental outcomes are equally likely and when little relevant data is available
- Based on a degree of belief
