Probability for Business Statistics Flashcards
Subjective probability
a prediction that is based on an individual’s personal judgment, not on mathematical calculations.
Probability
the likelihood of a certain event occurring out of a total possible number of events
Educated guess
relative frequency
the ratio of the occurrence of a singular event and the total number of outcomes
Theoretical probability
the ratio of the desired outcome and the total number of possible outcomes
Actual probability
the ratio of successful outcomes and the total number of trials
calculating of possible outcomes
a process for determining the number of possible results for an event
fundamental counting principle
This principle states that if there are p possibilities for one event and q possibilities for a second event, then the number of possibilities for both events is p x q.
permutation
an arrangement, or ordering, of a set of objects
Addition Rule of Probability
which is a rule for finding the union of two events, either mutually exclusive or non-mutually exclusive.
mutually exclusive event
which are events that cannot happen at the same time.
Find the total of possible outcomes
Find the desired outcomes
Create a ratio for each event
Add the ratios, or fractions, of each event
P(A or B) = P(A) + P(B)
non-mutually exclusive events
which are events that can happen separately or at the same time.
Find the total of possible outcomes
Find the desired outcomes
Create a ratio for each event
Add the ratios, or fractions, of each event
P(A or B) = P(A) + P(B) - P(A and B)
Multiplication Rule of Probability
to find the probability of the intersection of two events, multiply the two probabilities.
Independent events
when the probability of an event is not affected by a previous event
dependent event
when one event influences the outcome of another event in a probability scenario
Contingency tables
tools used by statisticians when they need to make sense of data that has more than one variable
also called cross tabulation tables or cross tab
The numbers displayed give the frequency of each data point.
contingent
dependent
set
a collection of elements
element
a collection of anything - numbers, letters, words, objects
subset
a special, funny set
every element in the subset can be found in the other set
Union
when two or more sets are united, or added together.
U
Intersection
when two or more sets intersect, or are common objects, in sets
set of elements that are found in both sets
Complement
when a set is subtracted or not included in the set.
Venn diagram
can show us the sets and operations nicely in picture form
disjoint set
It is disjoint, or has no elements that are the same in any other set, but it is still in our universal set.
element of a set
an object that can be found in that set
E
Bayes’ theorem
the probability of A happening if B happens is equal to the probability of A happening times the chance of B happening if A is true, divided by the probability of just B happening
