Chapter 4

Question 1

Probability

Answer 1

Numerical value that measures the likelihood that an event occurs

Question 2

Experiment

Answer 2

Process that leads to one of several possible outcomes

Question 3

Sample Space

Answer 3

A record of all possible outcomes of an experiment

Question 4

Event

Answer 4

Subset of a sample space

Question 5

Exhaustive Event

Answer 5

When all possible outcomes of an experiment are included in the events

Question 6

Mutually Exclusive Event

Answer 6

When events have no common outcomes of an experiment

Question 7

Union

Answer 7

The union of two events consisting of outcomes in A or B
Denoted as: A U B

Question 8

Intersection

Answer 8

Intersection of two events consisting of outcomes in A and B
Denoted as: A n B

Question 9

Complement

Answer 9

Consists of all outcomes in sample space S not in A
Denoted as: A(super(c))

Question 10

Subjective Probability

Answer 10

Probability value based on personal and subjective judgement

Question 11

Empirical Probability

Answer 11

Probability based on observing the relative frequency with which an event occurs

Question 12

Classical Probability

Answer 12

Probability used in games of chance.
Based on assumption that all outcomes are equally likely

Question 13

Law of Large Numbers

Answer 13

If an experiment is repeated a large number of times, its empirical probability approaches its classical probability

Question 14

Complement Rule

Answer 14

Probability of the complement of event A:

P(A(super c)) = 1 - P(A)

Question 15

Addition Rule

Answer 15

Probability that A or B occurs:

P(A U B) = P(A) + P(B) - P(A n B)

Question 16

Joint Probabilitiy

Answer 16

Values in the interior of a joint probability table, representing the probabilities of the intersection of two events

Question 17

Conditional Probability

Answer 17

Probability of an event given that another event has already occurred

Question 18

Unconditional Probability

Answer 18

Probability of an event without any restriction

Question 19

Unconditional Probability

Answer 19

Probability of an event without any restrictions

Question 20

Conditional Probability Formula

Answer 20

P(A|B) = P(A n B) / P(B)

Question 21

Independent

Answer 21

Occurrence of one event does not affect the probability of the occurrence of the other event

Question 22

Dependent

Answer 22

Occurrence of one event is related to the probability of the occurrence of the other

Question 23

Total Probability Rule

Answer 23

Expresses the unconditional probability of an event, P(A), in terms of probabilities conditional on various mutually exclusive and exhaustive events

Question 24

Bayes’ Theorem

Answer 24

Rule for updating probabilities is
P(B|A) = P(A|B)P(B)/P(A|B)P(B) + P(A|Bc) * P(Bc)
where P(B) is the prior probability and P(B|A) is the posterior probability

Question 25

Prior Probability

Answer 25

Unconditional probability before the arrival of new information