10/08/2014

Chapter 4
Basic Probability

PowerPoint to accompany:

Learning Objectives
After studying this Chapter you should have a better understanding of:
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Basic probability concepts

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Conditional probability

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To use Bayes’ theorem to revise probabilities

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Various counting rules

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Copyright © 2013 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442548473/Berenson/Basic Business Statistics/3e
9781442549272/Berenson/Business Statistics /2e

The Probability that an American can’t Locate the
US on a World Map is One Fifth

Source: http://www.youtube.com/watch?v=qQdhMSEqhfg&feature=related
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Copyright © 2013 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442548473/Berenson/Basic Business Statistics/3e
9781442549272/Berenson/Business Statistics /2e

Copyright © 2013 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –
9781442548473/Berenson/Basic Business Statistics/3e

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10/08/2014

Three Approaches to Assessing Probability
1. a priori classical probability
• based on prior knowledge
2. empirical classical probability based on observed data

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3. subjective probability based on individual judgment or opinion about the probability of occurrence •

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Copyright © 2013 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442549272/Berenson/Business Statistics /2e

Important Terms

Probability – a numerical value that represents the chance, likelihood, possibility that an event will occur (always between 0 and 1)
Event – Each possible outcome of a variable

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Copyright © 2013 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442548473/Berenson/Basic Business Statistics/3e
9781442549272/Berenson/Business Statistics /2e

Events
Simple