Introduction to probability, Applied Statistics

Introduction to Probability

A student is considering whether she should enroll in an MBA educational program offered by a well-known college. Among other things, she would like to know how difficult the program is she obtains the following marks distribution of students who appeared for the most final examination in the previous year.

Relative Frequency Distribution

Marks %

No. of students

% of students

0   - 25

 45

 8

25 - 50

280

50

50 - 75

205

37

75 - 100

30

 5

 

560

100

Assuming the next exam is equally tough and there are same proportion of dull and bright students, she may conclude that the percentage of students in the four classes of marks will again be

Marks %

% of students

0   - 25

8

25 - 50

50

50 - 75

37

75 - 100

5

 

100

The first distribution above is related to past data and is a frequency distribution. The second distribution has the same numbers and is a copy of the first distribution. However, this distribution relates to the future. Such a distribution is called a probability distribution. Note the similarity of this distribution with that of the relative frequency distribution.

Hence by inspecting the probability distribution we can say that:

8% of the students who are appearing for the exam will score 0 - 25% marks, 50% will score 25 - 50% marks, 37% will score 50 - 75% marks and the balance 5% will score 75 - 100% marks.

If our student considers herself to be among the top 5% of the students, she can conclude that she will score 75 - 100% marks. If she considers herself to be in the top 42% of students she can conclude that she will score 50 - 100% marks and so on. However, if she has no idea of her ability in relation to the other students she can conclude that:

She has an 8% chance of scoring 0 - 25% marks, a 50% chance of scoring
25 - 50% marks, a 37% chance of scoring 50 - 75% marks and a 5% chance of scoring 75 - 100% marks. This "chance" is called probability in statistical language.

Probability theory is used to analyze data for decision making.

The insurance industry uses probability theory to calculate premium rates. A stock analyst/investor, based on the probability estimates of economic scenarios and estimates the returns of the stocks. A project manager applies probability theory in decision-making.

Posted Date: 9/14/2012 4:08:30 AM | Location : United States







Related Discussions:- Introduction to probability, Assignment Help, Ask Question on Introduction to probability, Get Answer, Expert's Help, Introduction to probability Discussions

Write discussion on Introduction to probability
Your posts are moderated
Related Questions
#regression line drawn as Y=C+1075x, when x was 2, and y was 239, given that y intercept was 11. calculate the residual

2 bidders have identical valuations of an object for sale. The value of the object is either 0; 50 or 100, with equal probabilities. The object is allocated to one of the bidders i

Use the information given below to find the P-value. Also, use a 0.05 significance level and state the conclusion about the null hypothesis (reject the null hypothesis or fail to

A consumer preference study involving three different bottle designs (A, B, and C) for the jumbo size of a new liquid detergent was carried out using a randomized block experimenta

Melissa Bakery is preparing for the coming thanksgiving festival. The bakery plans to bake and sell its favourite cookies; butter cookies, chocolate cookies and almond cookies. A k

Using Chi Square Test when more than two Rows are Present   To understand this, let us consider the contingency table shown below. It gives us the information about the stage

Active Control Equivalence Studies (ACES) Clinical trials the field in which the object is easy to show that the new treatment is  as good as the existing treatment. Such type

prove standard deviation of natural natural numbers

Advantages It is especially useful in case of open-end classes since only the position and not the values of items must be known. The median is also recommended if th

what the purpose we use it