a. Interpret the following two probabilities: i. P(E|T;) = .30 ii. P(E|T6) = .19 b. Construct a graph of P(E|T;) versus i. That is, plot P(E|T;) on the y-axis and i = 1, 2, ..., 12 on the x-axis. c. Write a few sentences about how the probability of finding a job in the next month changes as a function of length of unemployment.
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.
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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.
![**6.35.** The events \(E\) and \(T_i\) are defined as follows:
- \(E =\) the event that someone who is out of work and actively looking for work will find a job within the next month.
- \(T_i =\) the event that someone who is currently out of work has been out of work for \(i\) months. For example, \(T_2\) is the event that someone who is out of work has been out of work for 2 months.
The following conditional probabilities are approximate and were read from a graph in the paper “The Probability of Finding a Job” (American Economic Review: Papers & Proceedings [2008]: 268–273).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95894948-0955-4b74-bfad-4e53fd8ebefa%2F1cd85a06-8dd6-4b92-9fa3-96af574d8ae8%2F4img86_processed.jpeg&w=3840&q=75)
The events and are defined as
= the event that someone who is out of work and actively looking for a work will find a job within the next month
= the event that someone who is currently out of work has been out of work for months
The conditional probabilities are given for to .
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