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QM262 TEST 2
Terms in this set (13)
What is meant by a probability distribution? Provide a clear example of your own making.
A list of all the possible outcomes of some experiment and the probability associated with each otcome
Under what conditions would a binomial probability distribution be appropriate? Provide a business-related example
Only 2 possible outcomes to an experiment
One a success and one failure
The probability of success is constant from trial to trial
The probability of a success of any one trial is independent of the probability of a success on any other trial
The experiment can be repeated many times
Under what conditions would a hypergeometric probability distribution be appropriate? provide a buisiness-related example
Only 2 possible outcomes
The probability of success does NOT remain constaint, nor
Is there independence among trials
(the hypergeometric distribution is applied when, unlike the binomial distribution, the probability of a success does not remain constant from trial to trial)
Under what conditions would a Poisson probability distribution be appropriate? provide a buisiness-related example
often used to describe the number of customers that arrive per hour
(The Poisson distribution is used to determine the probability some event will occur a specific number of times over some interval of time and space)
-Probability of the occurence of the event is constant for any two intervals of time or space
-The occurance of the event in any interval is independent of its occurance in any other interval of time or space
Under what conditions would an exponential probability distribution be appropriate? provide a buisiness-related example
Used to measure the passage of time between events.
(If the rate of occurances of some event over an interval of time or space fits a Poisson distribution then the passage of time or space between events fits the exponential distribution)
Under what conditions would a uniform probability distribution be appropriate? provide a buisiness-related example
All the probabilities of outcomes are the same (probability distribution for rolling a die)
Under what conditions would a normal probability distribution be appropriate? provide a buisiness-related example
a continuous distribution and as such must reflect a continuous variable suach as weight, time, incomes.
Characteried by a bell shaped curve and is defined by two parameters: the mean and the standard deviation.
What is the empirical rule? what does it have to do with standard deviation?
The empirical rule states that for a normal distribution, nearly all of the data will fall within three standard deviations of the mean.
99.7% fall within three standard deviations
95.5% fall within two standard deviations
68.3% fall within one standard deviation
What do the empirical rule and the normal distribution have in common?
What is the normal approximation of the binomial? When is it used? Provide a clear business-related illustration.
What is a sampling distribution? Provide a business-related illustration
A sampling distribution of sample means is simply a list of all possible samples of some given size and the mean of each sample
What do the empirical rule and the sampling distribution have in common?
What is the standard error of the sampling distribution? Clearly define it and give a buisiness-related illustration. Clearly explain what it measures
measures the degree of dispursion of the smple means arounf the unknown population mean
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