CHAPTER 5 Probability Review of basic concepts to accompany Introduction to business statistics fourth edition, by Ronald m. Weiers Presentation by Priscilla Chaffe-Stengel Donald N. Stengel o 2002 The Wadsworth Group
CHAPTER 5 Probability: Review of Basic Concepts to accompany Introduction to Business Statistics fourth edition, by Ronald M. Weiers Presentation by Priscilla Chaffe-Stengel Donald N. Stengel © 2002 The Wadsworth Group
Chapter 5- Learning objectives Construct and interpret a contingency table Frequencies relative frequencies cumulative relative frequencies Determine the probability of an event Construct and interpret a probability tree with sequential events Use Bayes Theorem to revise a probability Determine the number of combinations or permutations of n objects r at a time o 2002 The Wadsworth Group
Chapter 5 - Learning Objectives • Construct and interpret a contingency table – Frequencies, relative frequencies & cumulative relative frequencies • Determine the probability of an event. • Construct and interpret a probability tree with sequential events. • Use Bayes’ Theorem to revise a probability. • Determine the number of combinations or permutations of n objects r at a time. © 2002 The Wadsworth Group
Chapter 5-Key Terms Experiment Mutually exclusive events Sample space Exhaustive events · Event Marginal probabilit Probability Joint probability Odds Conditional probability Contingency table Independent events Venn diagram Tree diagram Union of events Counting Intersection of events Permutations Complement Combinations o 2002 The Wadsworth Group
Chapter 5 - Key Terms • Experiment • Sample space • Event • Probability • Odds • Contingency table • Venn diagram • Union of events • Intersection of events • Complement • Mutually exclusive events • Exhaustive events • Marginal probability • Joint probability • Conditional probability • Independent events • Tree diagram • Counting • Permutations • Combinations © 2002 The Wadsworth Group
l Chapter 5-Key Concepts The probability of a single event falls between0 and 1 The probability of the complement of event A, written a is P(A)=1-P(A) The law of large numbers: Over a large number of trials the relative frequency with which an event occurs will approach the probability of its occurrence for a single trial o 2002 The Wadsworth Group
Chapter 5 - Key Concepts • The probability of a single event falls between 0 and 1. • The probability of the complement of event A, written A’, is P(A’) = 1 – P(A) • The law of large numbers: Over a large number of trials, the relative frequency with which an event occurs will approach the probability of its occurrence for a single trial. © 2002 The Wadsworth Group
l Chapter 5-Key Concepts ° odds vs. probability If the probability event a occurs is b, then the odds in favor of event a occurring are a to Example: If the probability it will rain tomorrow is 20%, then the odds it will rain are 20 to (100-20), or 20 to 80, or 1 to 4 Example: If the odds an event will occur are 3 to 2, the probability it will occur is 33 3+25 o 2002 The Wadsworth Group
Chapter 5 - Key Concepts • Odds vs. probability If the probability event A occurs is , then the odds in favor of event A occurring are a to b – a. – Example: If the probability it will rain tomorrow is 20%, then the odds it will rain are 20 to (100 – 20), or 20 to 80, or 1 to 4. – Example: If the odds an event will occur are 3 to 2, the probability it will occur is a b 3 3+2 = 3 5 . © 2002 The Wadsworth Group