# Ch04 - Chapter 4 Introduction to Probability Learning...

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4 - 1 Chapter 4 Introduction to Probability Learning Objectives 1. Obtain an appreciation of the role probability information plays in the decision making process. 2. Understand probability as a numerical measure of the likelihood of occurrence. 3. Know the three methods commonly used for assigning probabilities and understand when they should be used. 4. Know how to use the laws that are available for computing the probabilities of events. 5. Understand how new information can be used to revise initial (prior) probability estimates using Bayes’ theorem.

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Chapter 4 4 - 2 Solutions: 1. Number of experimental Outcomes = (3) (2) (4) = 24 2. 6 3 6! 33 654321 321 321 20 F H G I K J == ⋅⋅⋅⋅⋅ ⋅⋅ = !! ( ) ( ) ABC ACE BCD BEF ABD ACF BCE CDE ABE ADE BCF CDF ABF ADF BDE CEF ACD AEF BDF DEF 3. P 3 6 6! 63 654 1 2 0 = () ! BDF BFD DBF DFB FBD FDB 4. a. H T H T H T H T H T H T H T (H,H,H) (H,H,T) (H,T,H) (H,T,T) (T,H,H) (T,H,T) (T,T,H) (T,T,T) 1st Toss 2nd Toss 3rd Toss b. Let: H be head and T be tail (H,H,H) (T,H,H) (H,H,T) (T,H,T) (H,T,H) (T,T,H) (H,T,T) (T,T,T) c. The outcomes are equally likely, so the probability of each outcomes is 1/8. 5. P(E i ) = 1 / 5 for i = 1, 2, 3, 4, 5 P(E i ) 0 for i = 1, 2, 3, 4, 5 P(E 1 ) + P(E 2 ) + P(E 3 ) + P(E 4 ) + P(E 5 ) = 1 / 5 + 1 / 5 + 1 / 5 + 1 / 5 + 1 / 5 = 1 The classical method was used.
Introduction to Probability 4 - 3 6. P (E 1 ) = .40, P(E 2 ) = .26, P(E 3 ) = .34 The relative frequency method was used. 7. No. Requirement (4.4) is not satisfied; the probabilities do not sum to 1. P(E 1 ) + P(E 2 ) + P(E 3 ) + P(E 4 ) = .10 + .15 + .40 + .20 = .85 8. a. There are four outcomes possible for this 2-step experiment; planning commission positive - council approves; planning commission positive - council disapproves; planning commission negative - council approves; planning commission negative - council disapproves. b. Let p = positive, n = negative, a = approves, and d = disapproves . Planning Commission Council p n a d a d (p, a) (p, d) (n, a) (n, d) 9. 50 4 50! 4 46! 50 49 48 47 4321 230 300 F H G I K J == ⋅⋅⋅ = ! , 10. a. Use the relative frequency approach: P(California) = 1,434/2,374 = .60 b. Number not from 4 states = 2,374 - 1,434 - 390 - 217 - 112 = 221 P(Not from 4 States) = 221/2,374 = .09 c. P(Not in Early Stages) = 1 - .22 = .78 d. Estimate of number of Massachusetts companies in early stage of development = (.22)390 86

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Chapter 4 4 - 4 e. If we assume the size of the awards did not differ by states, we can multiply the probability an award went to Colorado by the total venture funds disbursed to get an estimate. Estimate of Colorado funds = (112/2374)(\$32.4) = \$1.53 billion Authors' Note: The actual amount going to Colorado was \$1.74 billion. 11. a. Choose a person at random. Have the person taste the four blends and state which is preferred. b. Assign a probability of 1/4 to each blend. We use the classical method of equally likely outcomes here. c. Blend Probability 1 .20 2 .30 3 .35 4 .15 Total 1.00 The relative frequency method was used. 12. a. Use the counting rule for combinations: 53 53! (53)(52)(51)(50)(49) 2,869,685 5 5!48! (5)(4)(3)(2)(1)  == =   b. Very small: 1/2,869,685 = .000000348 c. Multiply the answer in part (a) by 42 to get the number of choices for the six numbers.
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Ch04 - Chapter 4 Introduction to Probability Learning...

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