Basic Probability (PPT)

Basic Business Statistics (8th Edition)
Chapter 4 - Basic Probability

Chapter Topics

• Basic probability concepts
• Sample spaces and events, simple probability, joint probability
• Conditional probability
• Statistical independence, marginal probability
• Bayes’s theorem

Events
Simple event

• Outcome from a sample space with one characteristic
• e.g.: A red card from a deck of cards

Joint event

• Involves two outcomes simultaneously
• e.g.: An ace that is also red from a deck of cards

Visualizing Events
Contingency tables
Tree diagrams

Simple Events
Joint Events
Special Events

• Impossible event
• Complement of event

Special Events

• Mutually exclusive events
• Collectively exhaustive events

Contingency Table
Tree Diagram
Probability
Probability is the numerical measure of the likelihood that an event will occur
Value is between 0 and 1
Sum of the probabilities of all mutually exclusive and collectively exhaustive events is 1

Computing Probabilities
The probability of an event E:
Each of the outcomes in the sample space is equally likely to occur

Computing Joint Probability
Joint Probability Using Contingency Table
Computing Compound Probability
Compound Probability
(Addition Rule)
Computing Conditional Probability
Conditional Probability Using Contingency Table
Conditional Probability and Statistical

Independence
Conditional probability:
Multiplication rule:

Conditional Probability and Statistical Independence

• Events A and B are independent if
• Events A and B are independent when the probability of one event, A, is not affected by another event, B

Chapter Summary

• Discussed basic probability concepts
• Sample spaces and events, simple probability, and joint probability
• Defined conditional probability
• Statistical independence, marginal probability
• Discussed Bayes’s theorem 

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