ECON 214 - Probability.pdf

This approach is called empirical because it is based

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This approach is called empirical because it is based on the collection and analysis of data. The probability value obtained in both classical and empirical approaches indicate the long run rate of occurrence of the event (that is, when the experiment is performed a large number of times). Slide 8

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Some terminologies Experiment: an activity such as tossing a coin, which has a range of possible observations or outcomes. Outcome: a particular result of an experiment. Trial: a single performance of the experiment. Sample space: all possible outcomes of the experiment. For a single toss of a coin the sample space is {Heads, Tails}. Event: a collection of one or more outcomes of an experiment. Slide 9
Calculating probability Let A be the event we want to calculate a probability for, and S , the sample space. The probability of the event A occurring is given by Where n(A) is the number of times the event A occurs and n(S) is the sample space. Example: On a single toss of a coin, P (Heads) = ½ ; P (Tails) = ½. Why? Slide 10 ( ) P( ) ( ) n A A n S

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