MSIS 3223 Exam 2 QUESTIONS AND THEIR CORRECT ANSWERS
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Course
MSIS 3223
Institution
MSIS 3223
Classical Definition of Probability
probabilities can be deduced from theoretical arguments
Relative frequency
probabilities are based on empirical data (information gathered through observation/experiement). the probability that an outcome will occur is simply the relative frequency assocaited ...
QUESTIONS AND
MSIS 3223 Exam 2
THEIR CORRECT ANSWERS
Classical Definition of Probability
probabilities can be deduced from theoretical
arguments
Relative frequency
probabilities are based on empirical data (information
gathered through observation/experiement). the
probability that an outcome will occur is simply the relative
frequency assocaited witht that outcome
Subjective probability
probabilities are based on judgment and experience
3 perspectives/types of probability
Classical
Relative Frequency
Subjective
Probabilities are expressed as values
between_______.
0 and 1
Classical definition of probability example
Suppose two consumers try a new product.
Four outcomes:
1. like, like
2. like, dislike
3. dislike, like
4. dislike, dislike
Probability at least one dislikes product = 3/4
, Subjective probability example
at the beginning of the season, sports expterts might
predict what the probability of a specific team winning the
national championship.
this is based off of judgement and experience.
random variable
a numerical description of the outcome of an experiment
random variables may be _____ or _____.
continuous or discrete
discrete random variable
is one for which the number of possible outcomes can
be counted
Examples:
- outcomes of dice rolls
- whether a customer likes or dislikes a product
- number of hits on a Web site link today
continuous random variable
has outcomes over one or more continuous intervals of
real numbers
Examples:
- weekly change in DJIA
- daily temperature
- time between machine failures
expected value
The mean of a probability distribution. This can be helful in
making a variety of decisions.
expected value example
Deal or No Deal
• Contestant had 5 briefcases left with $100, $400, $1000,
$50,000 or$300,000 in them.
• Expected value of briefcases is $70,300.
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