ECON10005 Chapter Notes - Chapter 3: Cumulative Distribution Function, Normal Distribution, Pareto Distribution
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Has a continuum of outcomes (i. e: has an uncountable number of outcomes = not possible to list) Can have any value between an interval ((cid:1853) < < (cid:1854)) weight, temperature) Useful for situations with many outcomes (prices, incomes, time, exam marks, length, Calculating probability: since there is an infinite number of values, the probability of individual value = We can use the range only: the sum of probabilities = 1. We can use a certain range and graph the probabilities of interval based on this range. When we smooth out the edges of the rectangles -> probability density function value and variance. Probability density function: ((cid:2183) (cid:3409) (cid:3409) (cid:2184): f(x) 0 (cid:1876) [a, b, the total area under (cid:1858)((cid:1876)) = 1. Probability density function: (cid:1858)((cid:1876)) var(x) = e [(cid:4666)x e(x)) F(x) is the probability that x falls in the range < x. A uniform distribution is defined on an interval [a,b].