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    Probabilities in real life

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    Can you think of situations in the business world or other real life situations where you would need to calculate or estimate probabilities?

    As a corollary, would you say that probabilities have to be numeric (quantitative) in order to be useful to business and industry? Why or why not?

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    Solution Preview

    Examples from life:
    1. Insurance companies base premiums on statistics of unpleasant events against which the insurance is made
    2. The planning of production of various goods involves the evaluation of probabilities of various eventualities, such as market fluctuations of prices on materials used, production by competitors, defaults on credit, ...
    3. FDA approval for drugs ...

    Solution Summary

    This provides a few examples of numeric and non-numeric probabilities in real life.