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Probability Roadmap Business Statistics R. Moore, Ph.D. - Coggle Diagram
Probability Roadmap
Business Statistics
R. Moore, Ph.D.
What Question Are You Trying to Answer?
Simple Probability
Simple
What is the Probability that Event A Happens:
P(A)
?
Equation:
Number of times Event A Occurs / Total Number of Outcomes
Complement
What is the Probability that Event A
Does Not
Happens:
P(Ac)
?
Equation:
P(Ac) = 1 - P(A)
Conditional Probability
What is the Probability that Event A Happens Given Some other Event B has Occurred:
P(A I B)
?
Equation:
P(A I B) = P(A n B) / P(B)
(Mutually Exclusive)
Equation:
P(B I A) = P(A n B) / P(A)
(Mutually Exclusive)
Equation:
P(A I B) = P(A)
(Independent)
Equation:
P(B I A) = P(B)
(Independent)
Bayes Theorem
Do we need to recalculate probabilities based on new information?
Equation:
P(B I A) = P(A I B1) x P(B1) / P(A I B1) P(B1) + P(A I B2) P(B2)
Joint Probability
Union
What is the Probability of A or B or Both A and B Occurring
P(A u B)
?
Equation:
P (A u B) = P(A) + P(B) - P(A n B)
(Mutually Exclusive)
Intersection
What is the Probability of A and B Occurring
P(A n B)
?
Equation:
P (A n B) = 0
(Mutually Exclusive)
Equation:
P(A n B) = P(A) x P(B)
(Independent)