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Data Analysis and Statistics for Geography, Environmental Science, and Engineering
book

Data Analysis and Statistics for Geography, Environmental Science, and Engineering

by Miguel F. Acevedo
December 2012
Beginner content levelBeginner
557 pages
19h 5m
English
CRC Press
Content preview from Data Analysis and Statistics for Geography, Environmental Science, and Engineering
39Probability Theory
To further exemplify, suppose ΔI = $2 million, ΔM = $10 million. Moreover, assume the spill
is relatively unlikely p = 0.2. Calculating the cost using Equation 2.27 we get ΔC = ΔIΔM×
p = 2 − 20 × 0.2 = −2 and because it is negative we decide to invest in the protective measure.
We can investigate what would happen if the probability p were higher or lower by plotting
ΔC vs. p (Figure 2.10). We see that when 0 ΔM <$2 million, the cost difference ΔC is never
negative and we always choose A
2
. Then when ΔM = $2 million, the spill would have to occur
with certainty (p = 1) for the options to be equal. As we increase ΔM
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Publisher Resources

ISBN: 9781439885017