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Theorems of Probability - Addition & Multiplication, Business Mathematics and Statistics Video Lecture | Business Mathematics and Statistics - B Com

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FAQs on Theorems of Probability - Addition & Multiplication, Business Mathematics and Statistics Video Lecture - Business Mathematics and Statistics - B Com

1. What are the addition and multiplication theorems of probability?
Ans. The addition theorem of probability states that for any two events A and B, the probability of either event A or event B occurring is equal to the sum of their individual probabilities, minus the probability of both events occurring simultaneously. Mathematically, it can be represented as P(A or B) = P(A) + P(B) - P(A and B). The multiplication theorem of probability, on the other hand, states that the probability of two independent events A and B occurring together is equal to the product of their individual probabilities. Mathematically, it can be represented as P(A and B) = P(A) * P(B), assuming A and B are independent events.
2. How can the addition theorem of probability be applied in business mathematics?
Ans. The addition theorem of probability is frequently used in business mathematics to calculate the probability of mutually exclusive events. For example, when forecasting sales, a business may want to calculate the probability of meeting the sales target by considering different scenarios, such as the probability of reaching the target through online sales or through physical store sales. By using the addition theorem, the business can determine the overall probability of achieving the sales target.
3. How is the multiplication theorem of probability relevant in statistics?
Ans. The multiplication theorem of probability is particularly relevant in statistics when dealing with the concept of conditional probability. Conditional probability refers to the probability of an event happening, given that another event has already occurred. The multiplication theorem allows statisticians to calculate the probability of two dependent events occurring together by multiplying the conditional probability of one event by the probability of the other event.
4. Can the addition and multiplication theorems be applied to non-independent events?
Ans. Yes, the addition and multiplication theorems of probability can be applied to both independent and dependent events. However, when dealing with dependent events, the calculations become more complex. In such cases, conditional probability is used to account for the dependency between events. The addition theorem is still applicable, but the multiplication theorem requires incorporating conditional probabilities.
5. How can the addition and multiplication theorems of probability be used to analyze business risks?
Ans. The addition and multiplication theorems of probability can be used to analyze business risks by assessing the likelihood of various events occurring. Businesses can assign probabilities to different risks and calculate the overall probability of experiencing a particular outcome. By using these theorems, businesses can make informed decisions, such as determining the optimal level of insurance coverage or evaluating the risk-reward trade-offs of different business strategies.
115 videos|142 docs
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