Have you ever wondered about the likelihood of an event occurring? Whether it’s the odds of your favorite football team winning on Sunday or how much you pay for car insurance, probability concepts can play a role in making those determinations. Respond to the following questions in a minimum of 175 words: Consider a situation in which you might need to use your understanding of probability to make an informed decision. What sorts of information would you collect? How might you use what you have learned about probability to determine a course of action? What are the possible benefits and limitations of this approach?

Discussion on Probability

Probability tells us about the likelihood of an event occurring by considering factors related to the event. Mathematically, the probability of an event occurring ranges from 0 to 1, with 0 indicating that the event is unlikely to happen while 1 indicates that the event is certain to happen (Levine, 2014). Probability can be applied in several instances to aid in making critical decisions. For instance, the probability of an increase in the prices of commodities can be used to make critical decisions about spending and business strategies. In such a probability sample, the possibility of prices of commodities increasing is 1 or 0, which implies that either the prices can increase (1) or remain the same (0).

To determine the most probable outcome, the researcher needs to collect information relating to the factors that affect the prices of commodities in a country, such as fuel prices, climatic conditions, domestic factors, and other factors that determine prices. The information obtained can be used to make critical decisions on spending and for business people on the most appropriate strategies to ensure profitability for their businesses. In case the probability of the prices of commodities increasing is high, a business person can resolve to reduce credit sales to avoid a shortage in income. The business person can also resolve to purchase in bulk and stock before an increase in prices. The approach has benefits since it acts as a basis for decision-making. After assessing the factors that lead to the most probable outcome, one can take the appropriate action. One limitation associated with probability for decision-making is that the seemingly unlikely event can also happen (Indeed, 2021). This makes it unreliable in some instances, especially when the causative agents can be assessed accurately.

References

Indeed. (2021). Types of Probability: Definition and Examples. Retrieved from https://www.indeed.com/career-advice/career-development/types-of-probability

Levine, D. (2014). Even You Can Learn Statistics and Analytics: An Easy to Understand Guide to Statistics and Analytics. 3rd Edition. Pearson FT Press