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Chapter 5
Econ 201
5
Economics
Undergraduate 3
04/05/2012

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Term
Random Variable
Definition
A variable typcially represented by x that has a single numeric value, determined by chance, for each outcome of the procedure
Term
Probability Distribution
Definition
A description that gives the probability for each value of the random variable often expressed on a graph, table, or formula.
Term
Discrete Random Variable
Definition
Either a finite number of values or countable, where countable refers to the fact that there might be infinitely many values. (1,2,3,4,5...)
Term
Continuous Random Variable
Definition
Infinitel many values, measured on a continuous scale, without gaps. (0.75, 1.2, 4.89...)
Term
What is the requirement for a probability distribution?
Definition

 1) ∑P(x) = 1

 

2) 0 ≤ P(x) ≤ 1 (for each individual x)

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