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Introductory Business Statistics 2e

Key Terms

Introductory Business Statistics 2eKey Terms

Key Terms

Conditional Probability
the likelihood that an event will occur given that another event has already occurred
Conditional Probability of A || B
P(A||B) is the probability that event A will occur given that the event B has already occurred.
Contingency Table
the method of displaying a frequency distribution as a table with rows and columns to show how two variables may be dependent (contingent) upon each other; the table provides an easy way to calculate conditional probabilities.
Equally Likely
Each outcome of an experiment has the same probability.
Event
a subset of the set of all outcomes of an experiment; the set of all outcomes of an experiment is called a sample space and is usually denoted by S. An event is an arbitrary subset in S. It can contain one outcome, two outcomes, no outcomes (empty subset), the entire sample space, and the like. Standard notations for events are capital letters such as A, B, C, and so on.
Experiment
a planned activity carried out under controlled conditions
Independent Events
The occurrence of one event has no effect on the probability of the occurrence of another event. Events A and B are independent if one of the following is true:
  1. P(A|B) = P(A)
  2. P(B|A) = P(B)
  3. P(A ∩ B) = P(A)P(B)
Intersection: the ∩∩ Event
An outcome is in the event A ∩∩ B if the outcome is in both A ∩∩ B at the same time.
Mutually Exclusive
Two events are mutually exclusive if the probability that they both happen at the same time is zero. If events A and B are mutually exclusive, then P(A ∩ B) = 0.
Outcome
a particular result of an experiment
Probability
a number between zero and one, inclusive, that gives the likelihood that a specific event will occur; the foundation of statistics is given by the following 3 axioms (by A.N. Kolmogorov, 1930’s): Let S denote the sample space and A and B are two events in S. Then:
  • 0 ≤ P(A) ≤ 1
  • If A and B are any two mutually exclusive events, then P(A ∪∪ B) = P(A) + P(B).
  • P(S) = 1
Sample Space
the set of all possible outcomes of an experiment
Tree Diagram
the useful visual representation of a sample space and events in the form of a “tree” with branches marked by possible outcomes together with associated probabilities (frequencies, relative frequencies)
Union: the ∪∪ Event
An outcome is in the event A ∪∪ B if the outcome is in A or is in B or is in both A and B.
Venn Diagram
the visual representation of a sample space and events in the form of circles or ovals showing their intersections
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