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CHAPTER 4: Probability > 4.2 METHODS OF ASSIGNING PROBABILITIES

4.2 METHODS OF ASSIGNING PROBABILITIES

The three general methods of assigning probabilities are (1) the classical method, (2) the relative frequency of occurrence method, and (3) subjective probabilities.

Classical Method of Assigning Probabilities

When probabilities are assigned based on laws and rules, the method is referred to as the classical method of assigning probabilities. This method involves an experiment, which is a process that produces outcomes, and an event, which is an outcome of an experiment.

When we assign probabilities using the classical method, the probability of an individual event occurring is determined as the ratio of the number of items in a population containing the event (ne) to the total number of items in the population (N). That is, P(E) = ne/N. For example, if a company has 200 workers and 70 are female, the probability of randomly selecting a female from this company is 70/200 = .35.


  

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