1. For detemining the monthly premiums of their customers, an automobile insurance company classifies drivers into 3 classes: Good drivers (G), medium-level drivers (M) and bad drivers (B). The percentage of drivers in each class is as follows: Class G: 25%, Class M: 60%, Class B: 15%. The probabilities that a driver in each of these classes will have an accident in one year are given as follows: For Class G= 0.005, for Class M= 0.025, for Class B= 0.035 a) What is the probability that a driver has an accident within the first year? b) A driver purchasing an insurance policy has an accident within the first year. What is the probability that he/she was classified as a good driver (in Class G)?
Compound Probability
Compound probability can be defined as the probability of the two events which are independent. It can be defined as the multiplication of the probability of two events that are not dependent.
Tree diagram
Probability theory is a branch of mathematics that deals with the subject of probability. Although there are many different concepts of probability, probability theory expresses the definition mathematically through a series of axioms. Usually, these axioms express probability in terms of a probability space, which assigns a measure with values ranging from 0 to 1 to a set of outcomes known as the sample space. An event is a subset of these outcomes that is described.
Conditional Probability
By definition, the term probability is expressed as a part of mathematics where the chance of an event that may either occur or not is evaluated and expressed in numerical terms. The range of the value within which probability can be expressed is between 0 and 1. The higher the chance of an event occurring, the closer is its value to be 1. If the probability of an event is 1, it means that the event will happen under all considered circumstances. Similarly, if the probability is exactly 0, then no matter the situation, the event will never occur.
Step by step
Solved in 2 steps
