Chapter 4 - Probability. After completing this unit, you should be able to: Define a probability and a sample space, list the outcomes in a sample space and use the list to compute probabilities, use elementary probability rules to compute probabilities, compute conditional probabilities and assess independence,. | Chapter 4 Probability Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Probability Probability and Sample Spaces Probability and Events Some Elementary Probability Rules Conditional Probability and Independence Bayes’ Theorem (Optional) Counting Rules (Optional) 4- Probability and Sample Spaces An experiment is any process of observation with an uncertain outcome The possible outcomes for an experiment are called the experimental outcomes Probability is a measure of the chance that an experimental outcome will occur when an experiment is carried out The sample space of an experiment is the set of all possible experimental outcomes The experimental outcomes in the sample space are called sample space outcomes LO4-1: Define a probability and a sample space. 4- Probability If E is an experimental outcome, then P(E) denotes the probability that E will occur and: Conditions 0 P(E) 1 such that: If | Chapter 4 Probability Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Probability Probability and Sample Spaces Probability and Events Some Elementary Probability Rules Conditional Probability and Independence Bayes’ Theorem (Optional) Counting Rules (Optional) 4- Probability and Sample Spaces An experiment is any process of observation with an uncertain outcome The possible outcomes for an experiment are called the experimental outcomes Probability is a measure of the chance that an experimental outcome will occur when an experiment is carried out The sample space of an experiment is the set of all possible experimental outcomes The experimental outcomes in the sample space are called sample space outcomes LO4-1: Define a probability and a sample space. 4- Probability If E is an experimental outcome, then P(E) denotes the probability that E will occur and: Conditions 0 P(E) 1 such that: If E can never occur, then P(E) = 0 If E is certain to occur, then P(E) = 1 The probabilities of all the experimental outcomes must sum to 1 LO4-1 4- Assigning Probabilities to Sample Space Outcomes Classical method For equally likely outcomes Relative frequency method Using the long run relative frequency Subjective method Assessment based on experience, expertise or intuition LO4-1 4- Probability and Events An event is a set of sample space outcomes The probability of an event is the sum of the probabilities of the sample space outcomes If all outcomes equally likely, the probability of an event is just the ratio of the number of outcomes that correspond to the event divided by the total number of outcomes LO4-2: List the outcomes in a sample space and use the list to compute probabilities. 4- Some Elementary Probability Rules Complement Union Intersection Addition Conditional probability Multiplication LO4-3: Use elementary profitability rules to compute
