# TA2 - ECO2121 Methods of Economic Statistics TA2 21 Jan...

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ECO2121: Methods of Economic Statistics TA2 21 Jan 2009 1. Sample Space S , Event, Probability Measure P and Random Variable X 2. Interpretations of P (a) Subjective Probability (b) Experimental Probability 3. Rules of P Pr{ A B } = Pr{ A } + Pr{ B } Pr{ A B } (a) Equally Likely: Pr{ A } = Pr{ B } (b) Mutually Exclusive: sets A and B are disjoint, i.e. A B = Ø , hence they cannot happen at the same time Pr{ A B } = 0 Especially, for sets A and A , A A = Ø , Pr{ A A } = 0 (c) Mutually Exhaustive: union of sets A and B covers every outcome, i.e. A B = S , hence Pr{ A B } = 1 Especially, for sets A and A , A A = S , Pr{ A A } = 1 They are commonly used (and misused) to describe the properties of two or more events. For instance, (a) and (b): Pr{ A B } = 2 × Pr{ A } = 2 × Pr{ B } (b) and (c): 1 = Pr{A} + Pr{B} Especially, for sets A and A , 1 = Pr{ A } + Pr{ A } Examples? 4.

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TA2 - ECO2121 Methods of Economic Statistics TA2 21 Jan...

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