Discuss what is meant by classical probability assessment and indicate why classical assessment is not often used in business applications.
Classical probability assessment
Answer 1 The classical probability assessment is a method where we have an experiment and an event. Then we see the possible outcomes of that experiment and each outcome would have the same chance. This formula shows how it works: P(A)=number of ways in which A occurs/ total number of outcomes. (A) is the event. The classical definition is usually not used in business because here all the outcomes should have the same chance, meaning the probability of the business succeeding or failing is ½. So this is not a good approach in business.
Classical probability assessment is a method that is used for defining experiments and events with particular interest. This is used for determining total possible outcomes that can be arranged from an experiment. The equation associated with is the number of times a variable “C” occurs divided by the total number of outcomes. Classical assessment method is usually not used in business applications because it doesn’t logical make sense in the business world as this method claims experiments are equally likely to occur. This method claims that businesses at a 50/50 chance of either passing or failing in which in logical terms that doesn’t occur.