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random process
generates outcomes that are determined purely by chance
probability
a number between 0 and 1 that describes the proportion of time the outcome would occur in a very long series of trials
Law of Large Numbers
if we observe more and more trials of any random process, the proportion of times that specific outcome occurs approaches its probability
simulation
imitates a random process in such a way that simulated outcomes are consistent with real-world outcomes
probability model
description of a random process that consists of 2 parts
a list of all possible outcomes
probability of each outcome
sample space
list of all possible outcomes
event
a subset of the possible outcomes from the sample space of a random process
A valid probability model must have:
all probs from 0-1
all possible outcome probs must add up to
Probability that an event does NOT occur is 1 minus the probability it DOES occur
complement rule
says that P(A°) = 1-P(A) where A° is the complement of event A, that is, the event that A does not occur
mutually exclusive
2 events that have no outcomes in common and so can never occur together
General addition rule
any 2 events resulting from the same random process…PIA or B)= P(A) + P(B) - P(A and B)
P(A and B) can be zero for mutually exclusive events
Venn Diagram
one or more circles surrounded by a rectangle
each circle represents an event
region inside the rectangle represents the sample space of the random process
Intersection
The event “A and B” of events
A∩B
Union
The event “A or B” of events
A∪B
conditional probability
the probability that one event happens given that another event is known to happen
Conditional Probability Formula
P(A and B)/P(B)
independent events
knowing whether or not one event has occurred does not change the probability that the other event will happen
General Multiplication Rule
for any random process, the probability that events A and B both occur
tree diagram
shows the sample of a random process involving multiple stages
The probability of each outcome is shown on the corresponding branch of the tree
Multiplication Rule for Independent events
says that if A and B are independent events, the probability that A and B both occur is
P(A) x P(B) = P(A and B)
Applies ONLY to independent events