Question 1

Which of the following best describes conditional probability?

Accepted Answer

The likelihood of an event happening, given that another event has already occurred.

Question 2

Given the conditional probability formula $P(A|B) = \frac{P(A \cap B)}{P(B)}$, what does $P(A \cap B)$ represent?

Accepted Answer

The probability of both events A and B occurring.

Question 3

If Andrew Jackson made more shots in a row, he is more likely to miss his next shot. This is an example of which cognitive bias?

Accepted Answer

Gambler's Fallacy

Question 4

A business manager believes that good performance in one quarter guarantees good performance in the next. Which bias is this?

Accepted Answer

Hot Hand Illusion

Question 5

Which of the following statements about the Law of the Third Kind is correct?

Accepted Answer

It refers to the tendency to see patterns in random data.

Question 6

Which formula would you use to calculate the probability of A occurring given B has occurred?

Accepted Answer

$P(A|B) = \frac{P(A \cap B)}{P(B)}$

Question 7

A company notices that sales and advertising expenses both increase over time. What statistical concept does this illustrate?

Accepted Answer

Correlation

Question 8

Which of the following is a correct interpretation of the statement: 'Correlation does not imply causation'?

Accepted Answer

Two variables may move together without one causing the other.

Question 9

Which cognitive bias involves drawing general conclusions from specific examples?

Accepted Answer

Selection Bias

Question 10

A manager believes that a rare event is more likely to happen because it has not occurred recently. Which bias is this?

Accepted Answer

Gambler's Fallacy

Question 11

Which of the following best describes the Availability Heuristic?

Accepted Answer

Judging the likelihood of events based on how easily examples come to mind.

Question 12

If $P(A) = 0.4$, $P(B) = 0.5$, and $P(A \cap B) = 0.2$, what is $P(A|B)$?

Accepted Answer

$0.4$

Question 13

A researcher only includes data that supports their hypothesis. This is an example of:

Accepted Answer

Confirmation Bias

Question 14

Which of the following is NOT a cognitive bias discussed in the notes?

Accepted Answer

Law of Large Numbers

Question 15

If two variables have a negative correlation, what does this mean?

Accepted Answer

As one variable increases, the other decreases.

Business Statistics: Probability, Biases, and Correlation (Week One Study Notes)

Study Guide - Practice Questions