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Definition
The incorrect belief that the probability of a certain even changes after a series of the event has occured ie. toss a coin, each time it is .5 probability |
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p(A) p=probability A= classification of something |
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Definition
The number of outcomes classified as A/ Total number of outcomes |
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| Analytic View of Probability |
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Definition
| Analysis of possible outcomes to define probability |
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| Relative Frequency View of Probability |
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Definition
| Viewing probability based on previous experiences leading to the likelihood of something happening |
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| Subjective View of Probability |
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Definition
not based on numbers or calculations, may or may not be accurate |
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Definition
| the outcome of a trial, the thing whose probability we are calculating |
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Definition
| Events are independent when the occurrence of one has no effect on the probability of the occurrence of the other. Two things have no influence on the other |
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| Mutually Exclusive Events |
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Definition
The occurrence of one event makes the other occurrence impossible ie: gender, days of the week |
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Definition
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Addition rule for probability |
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Definition
The probability of A or B when A and B are mutually exclusive random events p(A)+p(B) |
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| Addition rule if events are not mutually exclusive |
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Definition
p(A or B)= p(A)+p(B)- [p(A) x p(B)] ie: King or heart 4/52+13/52-(4/52)(13/52) |
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Multiplication rule with probability |
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Definition
If 2 events are independent, the probability of both of them occuring together p(A and B)= p(A) x p(B) MUST KNOW WITH OR WITHOUT REPLACEMENT |
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Definition
| Refers to the probability of the co-occurrence of 2 or more events (using the multiplication rule) |
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Definition
the probability that one event will occur GIVEN that some other event has occured denoted p(A/B) |
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Definition
| ie the factorial of 7=7x6x5x4x3x2x1 |
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Definition
Counting the number of ways something can happen N!/r!(N-r)! ie: 2 toppings out of 4 4!/2!(4-2)! |
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ORDER MATTERS N!/(N-r)! Does a different ordering of the same objects give you something new? |
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Term
| CPI (consumer price index) |
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Definition
| measures changes in the cost of a "market basket" of goods and service. the cost of that collection is measured during the base period |
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Definition
[current cost/base time period cost] x 100 if it equals 147, then the cost rose 47% (147% of what the cost was before) |
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Definition
| changes periodically, originally it was 1913 but it keeps raising |
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| Goods and services included in the base year |
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Definition
| changes about every 10 years (food, housing, transportation etc.) |
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Definition
price of earlier year x (later yr CPI/earlier yr CPI) = later year price |
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| 8 major categories for the market basket of goods and services |
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Definition
food and beverages housing apparel transportation medical care recreation education and commmunication other goods and services |
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Term
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Definition
1.) To evaluate and determine economic policy (to make economic) 2.) To compare prices at certain times 3.) To adjust other economic data for inflation 4.) To determine salary and price adjustments |
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Term
| 5 major criticisms of CPI |
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Definition
1.) market basket may not reflect current spending priorities 2.) If the price of one item rises, the consumers will substitute another 3.) The CPI does not adjust for changes in quality (it assumes if ppl buy something one yr they will the next) 4.) does not take advantage of sale prices 5.) does not measure prices for rual Americans |
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Term
| Leading Economic Indicators |
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Definition
| highs, lows, and changes tend to precede changes in the economy |
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Term
| Lagging economic indicater |
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Definition
| changes follow changes in the economy |
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