Chapter 3: Probability Concepts
In real life, people might be interested in the chance that a certain event happens. For example, when calculating your car insurance premium, the insurance company needs to estimate your chance of having a car accident. Given the fact that you just had a minor car accident, there is no doubt that your premium will be increased since the insurance company assumes your chance of having an accident has increased. This chapter introduces the basic concepts of probability that can be applied to calculate the chance of the occurrence of a certain event.
As a result of completing this chapter, you will be able to do the following:
- Identify the sample space of a chance experiment.
- Calculate probabilities using the equally likely outcome model (the [latex]\frac{f}{N}[/latex] rule) if applicable.
- Draw Venn diagrams to show relationship between events.
- Calculate probabilities of events using the addition, complementation, conditional, and multiplication rules.
- Show whether two events are independent by calculation.
- Calculate joint and marginal probabilities based on contingency tables.
- Use combinations and permutations to calculate the number of sample points of events.
