04 STAT probability theory IC Q1 new drug

04 STAT probability theory IC Q1 new drug - other cancers...

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Dr. V.R. Bencivenga Economic Statistics Economics 329 PROBABILITY—INDEX CARD QUESTION A NEW DRUG INDEX CARD QUESTION A drug company starts research to develop a cancer drug. This research may succeed in identifying a promising drug, or not. If a promising drug is developed, the company must get permission to conduct a field trial. If it gets permission to conduct a field trial, the field trial may yield positive or negative results—with positive results, the drug will be approved to go to market, but with negative results, it will be withheld from the market. If it goes to market, it may be adopted for use by oncologists (in other words, it will be successful), or not. If it is adopted, it may be used only for the original cancer it was field-tested on, or it may be used on
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Unformatted text preview: other cancers as well. a. View this as an experiment. Give a representation of the sample space. b. The probability of developing a promising drug is .7. The probability of getting permission for a field trial of a promising drug is .9. The probability of a field trial yielding positive results is .6. The probability of a new drug on the market being adopted for use is .9, and the probability an adopted drug will be used to treat other cancers is .8. Give the probability distribution over the sample space. c. Define event A to be the drug company ends up with a successful cancer drug on the market. What basic outcomes belong to A? What is P(A)?...
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