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# Business Stats ch 5

### Basic Statistics for Business and Economics ch 5

Question | Answer |
---|---|

Statistical Inference or Inferential Statistics | Computing the chance that something will occur in the future. |

Probability | A value between zero and one, inclusive, describing the relative possibility (chance or likelihood) an event will occur. |

Experiment | A process that leads to the occurrence of one and only one of several possible observations. |

Outcome | A particular result of an experiment. |

Event | A collection of one or more outcomes of an experiment. |

Classical Probability | A type of objective probability based on the assumption that the outcomes of an experiment are equally likely. Computed by dividing the number of favorable outcomes by the number of possible outcomes. |

Mutually Exclusive | The occurrence of one event means that none of the other events can occur at the same time. |

Collectively Exhaustive | At least one of the events must occur when an experiment is conducted. |

Empirical Probability | The probability of an event happening is the fraction of the time similar events happened in the past. |

Empirical or Relative Frequency | A type of objective probability and is based on the number of times an event occurs as a proportion of a known number of trials. |

Law a Large Numbers | Over a large number of trials the empirical probability of an event will approach its true probability. |

Subjective Concept of Probability | The likelihood (probability) of a particular event happening that is assigned by an individual based on whatever information is available. |

Objective Probability is subdivided into: | Classical Probability and Empirical Probability |

What are the two approaches to assign probabilities? | Objective Probability and Subjective Probability |

Special Rule of Addition | P(A OR B) = P(A) + P(B) |

Complement Rule | P(A) = 1- P(~A) |

Joint Probability | A probability that measures the likelihood two or more events will happen concurrently. |

General Rule of Addition | P(A or B)= P(A) + P(B) - P(A and B) |

Independence | The occurrence of one event has no effect on the probability of the occurrence of another event. |

Special Rule of Multiplication | P(A and B) = P(A)P(B) |

Conditional Probability | The probability of a particular event occurring, given that another event has occurred. |

General Rule of Multiplication | P(A and B) = P(A)P(B|A) |

Contingency Table | A table used to classify sample observations according to two or more identifiable characteristics. |

Tree Diagram | A graph that is helpful in organizing calculations that involves several stages. Each segment in the tree is one stage of the problem. The branches are weighted by probabilities. |

Multiplication Formula | If there are m ways of doing one thing and n ways of doing another thing, there are m x n ways of doing both. The total number of arrangements = (m)(n). |

Permutation Formula | Any arrangement of r objects selected from a single group of n possible objects. |

Combination Formula | If the order of the selected objects is not important. |