Statistics with Economics and

Business Applications

Probability and Discrete Probability

Distributions

Experiment, Event, Sample space, Probability, Counting rules,

Conditional probability, Bayes’s rule, random variables, mean,
variance 5E Note 4
 Descriptive and Inferential Statistics

Statistics can be broken into two basic types:

• Descriptive Statistics
We have already learnt this topic
• Inferential Statistics
Methods that making decisions or predictions
about a population based on sampled data.
• Probability

5E Note 4
 Why Learn Probability?
• Nothing in life is certain. In everything we do, we
gauge the chances of successful outcomes, from
business to medicine to the weather
• A probability provides a quantitative description of
the chances or likelihoods associated with various
outcomes
• It provides a bridge between descriptive and
inferential statistics
Probability

Population Sample
Statistics
5E Note 4
 Probabilistic vs Statistical Reasoning
• Suppose I know exactly the proportions of
car makes in California. Then I can find the
probability that the first car I see in the
street is a Ford. This is probabilistic
reasoning as I know the population and
predict the sample
• Now suppose that I do not know the
proportions of car makes in California, but
would like to estimate them. I observe a
random sample of cars in the street and then
I have an estimate of the proportions of the
population. This is statistical reasoning
5E Note 4
 What is Probability?
• In Chapters 2, we used graphs and
numerical measures to describe data sets
which were usually samples.
• We measured “how often” using
Relative
Relative frequency
frequency == f/n
f/n
• As n gets larger,
Sample Population
And “How often”
= Relative frequency Probability
Note 5 of 5E
 Basic Concepts
• An experiment is the process by which
an observation (or measurement) is
obtained.
• An event is an outcome of an experiment,
usually denoted by a capital letter.
– The basic element to which probability
is applied
– When an experiment is performed, a
particular event either happens, or it
doesn’t!
Note 5 of 5E
Experiments and Events
• Experiment: Record an age
– A: person is 30 years old
– B: person is older than 65
• Experiment: Toss a die
– A: observe an odd number
– B: observe a number greater than 2

Note 5 of 5E
 Basic Concepts
• Two events are mutually exclusive if,
when one event occurs, the other cannot,
and vice versa.
• Experiment: Toss a die Not Mutually
–A: observe an odd number Exclusive

–B: observe a number greater than 2

–C: observe a 6
B and C?
–D: observe a 3 Mutually
Exclusive B and D?
Note 5 of 5E
 Basic Concepts
• An event that cannot be decomposed is called
a simple event.
• Denoted by E with a subscript.
• Each simple event will be assigned a
probability, measuring “how often” it occurs.
• The set of all simple events of an experiment
is called the sample space, S.

Note 5 of 5E
 Example
• The die toss:
• Simple events: Sample space:
11 E1
S ={E1, E2, E3, E4, E5, E6}
22 E2
S
33 E3 • E1 • E3
44 E4 • E5
55
E5 • E2 • E4 • E6
66 E6
Note 5 of 5E
 Basic Concepts
• An event is a collection of one or more
simple events.
S
• E1 • E3
• The die toss: A • E5
– A: an odd number B
– B: a number > 2 • E2 • E4 • E6

A ={E1, E3, E5}

B ={E3, E4, E5, E6}
Note 5 of 5E
 The Probability
of an Event
• The probability of an event A measures “how
often” A will occur. We write P(A).
• Suppose that an experiment is performed n
times. The relative frequency for an event A is
Number of times A occurs f

n n
• If we let n get infinitely large,
f
P ( A) lim
n  n
Note 5 of 5E
 The Probability
of an Event
• P(A) must be between 0 and 1.
– If event A can never occur, P(A) = 0. If
event A always occurs when the
experiment is performed, P(A) =1.
• The sum of the probabilities for all
simple events in S equals 1.
•• The
The probability
probability of
of an
an event
eventA A isis found
found
by
by adding
adding the
the probabilities
probabilities of
of all
all the
the
simple
simple events
events contained
contained in
inA.
A. Note 5 of 5E
 Finding Probabilities
• Probabilities can be found using
– Estimates from empirical studies
– Common sense estimates based on
equally likely events.
• Examples:
–Toss a fair coin. P(Head) = 1/2
– Suppose that 10% of the U.S. population has
red hair. Then for a person selected at
random,
P(Red hair) = .10 Note 5 of 5E
 Using Simple Events
• The probability of an event A is equal to
the sum of the probabilities of the simple
events contained in A
• If the simple events in an experiment are
equally likely, you can calculate

n A number of simple events in A

P ( A)  
N total number of simple events
Note 5 of 5E
 Example 1
Toss a fair coin twice. What is the probability
of observing at least one head?

1st Coin 2nd Coin Ei P(Ei)

H
H HH
HH 1/4 P(at
H P(atleast
least11head)
head)
H
TT HT
HT 1/4 ==P(E
P(E11))++P(E
P(E22))++P(E
P(E33))
H TH 1/4 ==1/4
H TH 1/4++1/4
1/4++1/4
1/4==3/4
3/4
TT 1/4
TT TT
TT
Note 5 of 5E
 Example 2
A bowl contains three M&Ms®, one red, one
blue and one green. A child selects two M&Ms
at random. What is the probability that at least
one is red?
1st M&M 2nd M&M Ei P(Ei)
m RB
m RB 1/6
m RG
RG 1/6 P(at
P(atleast
least11red)
red)
m
m
BR
BR 1/6 ==P(RB)
P(RB)++P(BR)+
P(BR)+P(RG)
P(RG)
m
BG
++P(GR)
P(GR)
BG 1/6
m
m
GB ==4/6
4/6 ==2/3
2/3
GB 1/6
m GR
GR 1/6
Note 5 of 5E
 Example 3
The sample space of throwing a pair of dice is

Note 5 of 5E
 Example 3
Event Simple events Probability

Dice add to 3 (1,2),(2,1) 2/36

Dice add to 6 (1,5),(2,4),(3,3), 5/36
(4,2),(5,1)
Red die show 1 (1,1),(1,2),(1,3), 6/36
(1,4),(1,5),(1,6)
Green die show 1 (1,1),(2,1),(3,1), 6/36
(4,1),(5,1),(6,1)
Note 5 of 5E
 Counting Rules
• Sample space of throwing 3 dice has
216 entries, sample space of throwing
4 dice has 1296 entries, …
• At some point, we have to stop listing
and start thinking …
• We need some counting rules

Note 5 of 5E
 The mn Rule
• If an experiment is performed in two stages,
with m ways to accomplish the first stage and
n ways to accomplish the second stage, then
there are mn ways to accomplish the
experiment.
• This rule is easily extended to k stages, with
the number of ways equal to
n1 n2 n3 … nk
Example: Toss two coins. The total number of
simple events is:
22 
 22 == 44
Note 5 of 5E
 Examples m

m
Example: Toss three coins. The total number of
simple events is: 22 
 22  22 == 88
Example: Toss two dice. The total number of
simple events is: 6  6 = 36
6  6 = 36
Example: Toss three dice. The total number of
simple events is: 666=
666=
216
216
Example: Two M&Ms are drawn from a dish
containing two red and two blue candies. The total
number of simple events is:
44 
 33 == 12
12 Note 5 of 5E
 Permutations
• The number of ways you can arrange
n distinct objects, taking them r at a time
is Prn  n!
(n  r )!
where n!n(n  1)( n  2)...( 2)(1) and 0!1.
Example: How many 3-digit lock combinations
can we make from the numbers 1, 2, 3, and 4?
The order of the choice is 4!
4
important!
P  4(3)( 2) 24
3
1! Note 5 of 5E
 Examples
Example: A lock consists of five parts and
can be assembled in any order. A quality
control engineer wants to test each order for
efficiency of assembly. How many orders are
there?
The order of the choice is
important!
5!5
P  5(4)(3)( 2)(1) 120
5
0!
Note 5 of 5E
 Combinations
• The number of distinct combinations of n
distinct objects that can be formed,
taking them r at a time is n n!
Cr 
r!(n  r )!
Example: Three members of a 5-person committee must
be chosen to form a subcommittee. How many different
subcommittees could be formed?
5 5! 5(4)(3)( 2)1 5(4)
The order of C 
3   10
the choice is 3!(5  3)! 3(2)(1)( 2)1 (2)1
not important! Note 5 of 5E
 Example m
m m
m mm
• A box contains six M&Ms®, four red
and two green. A child selects two M&Ms at
random. What is the probability that exactly
one is red? 2!
6 6! 6(5) 2
C1  2
The order of C 
2  15 1!1!
2!4! 2(1)
the choice is ways to choose
not important! ways to choose 2 M & Ms.
1 green M & M.
4 4!
C  4
1 4  2 =8 ways to
1!3! choose 1 red and 1 P(exactly one
ways to choose green M&M. red) = 8/15
1 red M & M.
Note 5 of 5E
 Example
A deck of cards consists of 52 cards, 13 "kinds"
each of four suits (spades, hearts, diamonds, and
clubs). The 13 kinds are Ace (A), 2, 3, 4, 5, 6, 7,
8, 9, 10, Jack (J), Queen (Q), King (K). In many
poker games, each player is dealt five cards from
a well shuffled deck.

52 52! 52(51)(50)( 49)48

There are C 5   2,598,960
5!(52  5)! 5(4)(3)( 2)1
possible hands
Note 5 of 5E
 Example
Four of a kind: 4 of the 5 cards are the same
“kind”. What is the probability of getting
four of a kind in a five card hand?
There are 13 possible choices for the kind of
which to have four, and 52-4=48 choices for
the fifth card. Once the kind has been
specified, the four are completely determined:
you need all four cards of that kind. Thus
there are 13×48=624 ways to get four of a
kind.
and
The probability=624/2598960=.000240096 Note 5 of 5E
 Example
One pair: two of the cards are of one kind,
the other three are of three different kinds.
What is the probability of getting one pair
in a five card hand?
There are 13 possible choices for the kind
of which to have a pair; given the choice,
4
there are C 6 possible choices of two
2

of the four cards of that kind Note 5 of 5E

 Example
There are 12 kinds remaining from
which to select the other three cards in
the hand. We must insist that the kinds
be different from each other and from
the kind of which we have a pair, or we
could end up with a second pair, three
or four of a kind, or a full house.

Note 5 of 5E
 Example
12
There are C 3 220 ways to pick the kinds of
the remaining three cards. There are 4 choices
for the suit of each of those three cards, a total
of 4 3 64 choices for the suits of all three.
Therefore the number of " one pair" hands is
13 6 220 64 1,098,240.
The probabilit y 1098240/25 98960 
.422569
Note 5 of 5E
 Event Relations
The beauty of using events, rather than simple events, is
that we can combine events to make other events using
logical operations: and, or and not.
The union of two events, A and B, is the event that
either A or B or both occur when the experiment is
performed. We write
A B

AB A B

Note 5 of 5E
 Event Relations
The intersection of two events, A and B, is
the event that both A and B occur when the
experiment is performed. We write A B.
S

AB A B

• If two events A and B are mutually

exclusive, then P(A B) = 0.
Note 5 of 5E
 Event Relations
The complement of an event A consists of
all outcomes of the experiment that do not
result in event A. We write AC.

S
AC

Note 5 of 5E
 Example
Select a student from the classroom and
record his/her hair color and gender.
– A: student has brown hair
– B: student is female
– C: student is male Mutually exclusive; B = CC
What is the relationship between events B and C?
• AC: Student does not have brown hair
• BC: Student is both male and female = 
• BC: Student is either male and female = all students = S
Note 5 of 5E
 Calculating Probabilities for
Unions and Complements
• There are special rules that will allow you to
calculate probabilities for composite events.
• The Additive Rule for Unions:
• For any two events, A and B, the probability
of their union, P(A B), is

P ( A  B ) P ( A)  P ( B )  P ( A  B )
A B

Note 5 of 5E
Example: Additive Rule
Example: Suppose that there were 120
students in the classroom, and that they
could be classified as follows:
A: brown hair Brown Not Brown
P(A) = 50/120 Male 20 40
B: female Female 30 30
P(B) = 60/120
P(AB)
P(AB) == P(A)
P(A) ++ P(B)
P(B) –– P(AB)
P(AB)
== 50/120
50/120 ++ 60/120
60/120 -- 30/120
30/120
== 80/120
80/120 == 2/3
2/3 Check:
Check: P(AB)
P(AB)
== (20
(20 ++ 30
30 ++ 30)/120
30)/120
Note 5 of 5E
 Example: Two Dice
A: red die show 1
B: green die show 1

P(AB)
P(AB) == P(A)
P(A) ++ P(B)
P(B) –– P(AB)
P(AB)
== 6/36
6/36 ++ 6/36
6/36 –– 1/36
1/36
== 11/36
11/36
Note 5 of 5E
 A Special Case
When two events A and B are
mutually exclusive, P(AB) = 0
and P(AB) = P(A) + P(B).
A: male with brown hair Brown Not Brown
P(A) = 20/120 Male 20 40
B: female with brown hair Female 30 30
P(B) = 30/120
A and B are mutually P(AB)
P(AB) == P(A)
P(A) ++ P(B)
P(B)
== 20/120
20/120 ++ 30/120
30/120
exclusive, so that
== 50/120
50/120
Note 5 of 5E
 Example: Two Dice

A: dice add to 3
B: dice add to 6

A and B are mutually P(AB)

P(AB) == P(A)
P(A) ++ P(B)
P(B)
== 2/36
2/36 ++ 5/36
5/36
exclusive, so that
== 7/36
7/36
Note 5 of 5E
 Calculating Probabilities AC
A
for Complements
• We know that for any event A:
– P(A AC) = 0
• Since either A or AC must occur,
P(A AC) =1
• so that P(A AC) = P(A)+ P(AC) = 1

P(A
P(A )) == 11 –– P(A)
CC
P(A)
Note 5 of 5E
 Example
Select a student at random from
the classroom. Define:
A: male Brown Not Brown
P(A) = 60/120 Male 20 40
B: female Female 30 30
P(B) = ?

A and B are P(B)

P(B) == 1-
1- P(A)
P(A)
complementary, so that == 1-
1- 60/120
60/120 == 60/120
60/120
Note 5 of 5E
 Calculating Probabilities for
Intersections
In the previous example, we found P(A  B)
directly from the table. Sometimes this is
impractical or impossible. The rule for calculating
P(A  B) depends on the idea of independent
and dependent events.
Two
Two events,
events, A
A and
and B,
B, are
are said
said to
to be
be
independent
independent ifif the
the occurrence
occurrence or or
nonoccurrence
nonoccurrence of of one
one of
of the
the events
events does
does
not
not change
change the
the probability
probability ofof the
the
occurrence
occurrence of
of the
the other
other event.
event. Note 5 of 5E
 Conditional Probabilities
The probability that A occurs, given
that event B has occurred is called
the conditional probability of A
given B and is defined as
P( A  B)
P( A | B)  if P ( B ) 0
P( B)

“given”
Note 5 of 5E
 Example 1
Toss a fair coin twice. Define
– A: head on second toss
– B: head on first toss
P(A|B)
P(A|B) == ½
½
HH
HH P(A|not
1/4 P(A|not B)
B) == ½
½
HT
HT 1/4
1/4 P(A) does not A and B are
TH
TH change, whether
1/4 independent!
TT
TT
B happens or
not…
Note 5 of 5E
 Example 2
A bowl contains five M&Ms®, two red and
three blue. Randomly select two candies, and
define
– A: second candy is red.
– B: first candy is blue.
m P(A|B)
P(A|B) =P(2
=P(2nd red|1
nd
red|1st blue)=
st
blue)= 2/4
2/4 == 1/2
1/2
m m
P(A|not
P(A|not B)
B) == P(2
P(2nd red|1
nd
red|1st red)
st
red) == 1/4
1/4
m m

P(A) does change,

depending on A and B are
whether B happens dependent!
or not… Note 5 of 5E
 Example 3: Two Dice
Toss a pair of fair dice. Define
– A: red die show 1
– B: green die show 1

P(A|B)
P(A|B) == P(A
P(Aand
and B)/P(B)
B)/P(B)
=1/36/1/6=1/6=P(A)
=1/36/1/6=1/6=P(A)

P(A) does not

change, whether A and B are
B happens or independent!
not… Note 5 of 5E
 Example 3: Two Dice
Toss a pair of fair dice. Define
– A: add to 3
– B: add to 6

P(A|B)
P(A|B) == P(A
P(Aand
and B)/P(B)
B)/P(B)
=0/36/5/6=0
=0/36/5/6=0

P(A) does change A and B are dependent!

when B happens In fact, when B happens,
A can’t
Note 5 of 5E
 Defining Independence
• We can redefine independence in terms of
conditional probabilities:
Two
Two events
eventsAAand
and BB are
are independent
independent ifif and
and
only
only ifif
P(A|B)
P(A|B) == P(A)
P(A) oror P(B|A)
P(B|A) == P(B)
P(B)
Otherwise,
Otherwise, they
they are
are dependent.
dependent.
• Once you’ve decided whether or not two
events are independent, you can use the
following rule to calculate their
intersection. Note 5 of 5E
 The Multiplicative Rule for
Intersections
• For any two events, A and B, the
probability that both A and B occur is
P(AB)
P(A B) == P(A)
P(A) P(B
P(B given
given that
thatA
Aoccurred)
occurred)
== P(A)P(B|A)
P(A)P(B|A)
• If the events A and B are independent, then
the probability that both A and B occur is
P(AB)
P(A B) == P(A)
P(A)
P(B)
P(B)
Note 5 of 5E
 Example 1
In a certain population, 10% of the people can be
classified as being high risk for a heart attack. Three
people are randomly selected from this population.
What is the probability that exactly one of the three are
high risk?
Define H: high risk N: not high risk
P(exactly
P(exactly one
one high
high risk)
risk) == P(HNN)
P(HNN) ++ P(NHN)
P(NHN) ++ P(NNH)
P(NNH)
== P(H)P(N)P(N)
P(H)P(N)P(N) ++ P(N)P(H)P(N)
P(N)P(H)P(N) ++ P(N)P(N)P(H)
P(N)P(N)P(H)
== (.1)(.9)(.9)
(.1)(.9)(.9) + (.9)(.1)(.9) + (.9)(.9)(.1)= 3(.1)(.9) == .243
+ (.9)(.1)(.9) + (.9)(.9)(.1)= 3(.1)(.9) 22
.243

Note 5 of 5E
 Example 2
Suppose we have additional information in the
previous example. We know that only 49% of the
population are female. Also, of the female patients, 8%
are high risk. A single person is selected at random. What
is the probability that it is a high risk female?
Define H: high risk F: female
From
From the
the example,
example, P(F)
P(F) == .49
.49 and
and P(H|F)
P(H|F) == .08.
.08.
Use
Use the
the Multiplicative
Multiplicative Rule:
Rule:
P(high
P(high risk
risk female)
female) == P(HF)
P(HF)
== P(F)P(H|F)
P(F)P(H|F) =.49(.08)
=.49(.08) == .0392
.0392
Note 5 of 5E
The Law of Total Probability
Let S1 , S2 , S3 ,..., Sk be mutually exclusive
and exhaustive events (that is, one and only
one must happen). Then the probability of
any event A can be written as
P(A) P(A
P(A) == P(A P(A
 SS11)) ++ P(A  SS22)) ++ … P(A
… ++ P(A  SSkk))
== P(S
P(S11)P(A|S
)P(A|S11)) ++ P(S
P(S22)P(A|S
)P(A|S22)) ++ …
… ++ P(S
P(Skk)P(A|S
)P(A|Skk))

Note 5 of 5E
 The Law of Total Probability
S1

A Sk
A

A  S1
Sk
S2….

P(A) P(A
P(A) == P(A P(A
 SS11)) ++ P(A  SS22)) ++ … P(A
… ++ P(A  SSkk))
== P(S
P(S11)P(A|S
)P(A|S11)) ++ P(S
P(S22)P(A|S
)P(A|S22)) ++ …
… ++ P(S
P(Skk)P(A|S
)P(A|Skk))

Note 5 of 5E
 Bayes’ Rule
Let S1 , S2 , S3 ,..., Sk be mutually exclusive and
exhaustive events with prior probabilities P(S 1),
P(S2),…,P(Sk). If an event A occurs, the posterior
probability of Si, given that A occurred is
P( Si ) P( A | Si )
P ( Si | A)  for i  1, 2 ,...k
 P( Si ) P( A | Si )
Proof
P ( ASi )
P( A | Si )    P ( ASi ) P ( Si ) P ( A | Si )
P( Si )
P ( ASi ) P( Si ) P( A | Si )
P ( Si | A)  
P ( A)  P( Si ) P( A | Si )
Note 5 of 5E
 Example
From a previous example, we know that 49% of the
population are female. Of the female patients, 8% are
high risk for heart attack, while 12% of the male patients
are high risk. A single person is selected at random and
found to be high risk. What is the probability that it is a
male? Define H: high risk F: female M: male

We P( M ) P( H | M )
We know:
know: .49
P( M | H ) 
P(F)
P(F) == P( M ) P( H | M )  P( F ) P( H | F )
P(M) .51
P(M) == 
.51 (.12)
.61
P(H|F)
P(H|F) == .08 .51 (.12)  .49 (.08)
P(H|M)
P(H|M) == .12
Note 5 of 5E
 Example
Suppose a rare disease infects one out of
every 1000 people in a population. And
suppose that there is a good, but not perfect,
test for this disease: if a person has the
disease, the test comes back positive 99% of
the time. On the other hand, the test also
produces some false positives: 2% of
uninfected people are also test positive. And
someone just tested positive. What are his
chances of having this disease?

Note 5 of 5E
 Example
Define A: has the disease B: test positive
We
We know:
know:
P(A)
P(A) == .001
.001 P(A
P(A )) =.999
cc
=.999
P(B|A)
P(B|A) == .99
.99 P(B|A
P(B|Ac)) =.02
c
=.02

We want to know P(A|B)=?

P ( A ) P ( B| A )
P( A | B)  c c
P ( A ) P ( B| A )  P ( A ) P ( B| A )
.001  .99
  .0472
.001  .99  .999  .02 Note 5 of 5E
 Example
A survey of job satisfaction2 of teachers was
taken, giving the following results
Job Satisfaction
Satisfied Unsatisfied Total
L
E
College 74 43 117
V
E
High School 224 171 395
L Elementary 126 140 266
Total 424 354 778

2
“Psychology of the Scientist: Work Related Attitudes of U.S. Scientists”
(Psychological Reports (1991): 443 – 450). Note 5 of 5E
 Example
If all the cells are divided by the total number
surveyed, 778, the resulting table is a table of
empirically derived probabilities.

Job Satisfaction
Satisfied Unsatisfied Total
L
E
College 0.095 0.055 0.150
V
E
High School 0.288 0.220 0.508
L
Elementary 0.162 0.180 0.342
Total 0.545 0.455 1.000

Note 5 of 5E
 Job Satisfaction
Satisfied Unsatisfied Total

Example College 0.095 0.055

L
E
0.150
V
E
High School 0.288 0.220 0.508
L Elementary 0.162 0.180 0.342
Total 0.545 0.455 1.000

For convenience, let C stand for the event that

the teacher teaches college, S stand for the
teacher being satisfied and so on. Let’s look at
some probabilities and what they mean.

P(C) 0.150 is the proportion of teachers who are

college teachers.
P(S) 0.545 is the proportion of teachers who are
satisfied with their job.
P(C  S) 0.095 is the proportion of teachers who are
college teachers and who are satisfied
Note 5 of 5E
with their job.
 Job Satisfaction
Satisfied Unsatisfied Total
L
E
College 0.095 0.055 0.150

Example High School 0.288 0.220

V
E
0.508
L Elementary 0.162 0.180 0.342
Total 0.545 0.455 1.000

P(C  S) is the proportion of teachers who

P(C | S)  are college teachers given they are
P(S)
satisfied. Restated: This is the
0.095 proportion of satisfied that are
 0.175
0.545 college teachers.

P(S  C) is the proportion of teachers who

P(S | C) 
P(C) are satisfied given they are college
P(C  S) 0.095 teachers. Restated: This is the
 
P(C) 0.150 proportion of college teachers that
0.632 are satisfied. Note 5 of 5E
 Job Satisfaction
Satisfied Unsatisfied Total
L
College 0.095 0.055 0.150
Example
E
V
E
High School 0.288 0.220 0.508
L Elementary 0.162 0.180 0.342
Total 0.545 0.455 1.000

Are C and S independent events?

P(C  S) 0.095
P(C) 0.150 and P(C | S)   0.175
P(S) 0.545

P(C|S)  P(C) so C and S are dependent

events.
Note 5 of 5E
 Job Satisfaction
Satisfied Unsatisfied Total
L
College 0.095 0.055 0.150
Example
E
V
E
High School 0.288 0.220 0.508
L
Elementary 0.162 0.180 0.658
Total 0.545 0.455 1.000

P(CS)?

P(C) = 0.150, P(S) = 0.545 and

P(CS) = 0.095, so
P(CS) = P(C)+P(S) - P(CS)
= 0.150 + 0.545 - 0.095
= 0.600
Note 5 of 5E
 Example
Tom and Dick are going to take
a driver's test at the nearest DMV office. Tom
estimates that his chances to pass the test are
70% and Dick estimates his as 80%. Tom and
Dick take their tests independently.
Define D = {Dick passes the driving test}
T = {Tom passes the driving test}
T and D are independent.
P (T) = 0.7, P (D) = 0.8
Note 5 of 5E
 Example
What is the probability that at most one of
the two friends will pass the test?
P(At
P(At most
most one
one person
person pass)
pass)
P(Dc 
== P(D P(Dc
 TTc)) ++ P(D  T) P(D 
T) ++ P(D  TTc))
c c c c

== (1
(1 -- 0.8)
0.8) (1
(1 –– 0.7)
0.7) ++ (0.7)
(0.7) (1
(1 –– 0.8)
0.8) ++ (0.8)
(0.8) (1
(1 –– 0.7)
0.7)
== .44
.44

P(At
P(At most
most one
one person
person pass)
pass)
== 1-P(both
1-P(both pass)
pass) == 1-
1- 0.8
0.8 xx 0.7
0.7 == .44
.44
Note 5 of 5E
 Example
What is the probability that at least one of
the two friends will pass the test?
P(At
P(At least
least one
one person
person pass)
pass)
P(D 
== P(D T) T)
== 0.8
0.8 ++ 0.7
0.7 -- 0.8
0.8 xx 0.7
0.7
== .94
.94

P(At
P(At least
least one
one person
person pass)
pass)
== 1-P(neither
1-P(neitherpasses)
passes) == 1-
1- (1-0.8)
(1-0.8) xx (1-0.7)
(1-0.7) == .94
.94
Note 5 of 5E
 Example
Suppose we know that only one of the two
friends passed the test. What is the
probability that it was Dick?
P(D
P(D || exactly
exactly one
one person
person passed)
passed)
P(D 
== P(D exactly
exactly one
one person
person passed)
passed) // P(exactly
P(exactly one
one
person
person passed)
passed)
P(D  T ) / (P(D  T ) + P(D 
== P(D  T ) / (P(D  T ) + P(D  T)
T) ))
cc cc cc

== 0.8
0.8 xx (1-0.7)/(0.8
(1-0.7)/(0.8 xx (1-0.7)+(1-.8)
(1-0.7)+(1-.8) xx 0.7)
0.7)
== .63
.63
Note 5 of 5E
 Random Variables
• A quantitative variable x is a random variable if
the value that it assumes, corresponding to the
outcome of an experiment is a chance or random
event.
• Random variables can be discrete or
continuous.
• Examples:
x = SAT score for a randomly selected student
x = number of people in a room at a randomly
selected time of day
x = number on the upper face of a randomly
tossed die Note 5 of 5E
Probability Distributions for
Discrete Random Variables
The probability distribution for a discrete
random variable x resembles the relative
frequency distributions we constructed in
Chapter 2. It is a graph, table or formula that
gives the possible values of x and the
probability p(x) associated with each value.

We must have
0  p ( x) 1 and  p ( x) 1
Note 5 of 5E
 Example
Toss a fair coin three times and
define x = number of heads.
x x p(x)
HHH
HHH
1/8 3 P(x
P(x == 0)
0) == 1/8
1/8 0 1/8
HHT
HHT
1/8 2 P(x
P(x == 1)
1) == 3/8
3/8 1 3/8
HTH
HTH P(x
P(x == 2)
2) == 3/8
3/8 2 3/8
1/8 2
THH
P(x
P(x == 3)
3) == 1/8
1/8 3 1/8
THH 1/8 2
HTT
HTT 1/8 1
Probability
Probability
THT
THT 1/8 1
Histogram
Histogramfor
forxx
1/8 1
TTH
TTH
1/8 0
TTT
TTT Note 5 of 5E
 Example
Toss two dice and define
x = sum of two dice. x p(x)

2 1/36
3 2/36
4 3/36
5 4/36
6 5/36
7 6/36
8 5/36
9 4/36
10 3/36
11 2/36
12 Note1/36
5 of 5E
 Probability Distributions
Probability distributions can be used to describe
the population, just as we described samples in
Chapter 2.
– Shape: Symmetric, skewed, mound-shaped…
– Outliers: unusual or unlikely measurements
– Center and spread: mean and standard
deviation. A population mean is called m and a
population standard deviation is called s.

Note 5 of 5E
 The Mean
and Standard Deviation
Let x be a discrete random variable with
probability distribution p(x). Then the
mean, variance and standard deviation of x
are given as
Mean :   xp ( x)
Variance :   ( x   ) p ( x)
2 2

Standard deviation :    2

Note 5 of 5E
 Example
Toss a fair coin 3 times and
record x the number of heads.
x p(x) xp(x) (x-m)2p(x) 12
0 1/8 0 (-1.5)2(1/8)   xp ( x)  1.5
8
1 3/8 3/8 (-0.5)2(3/8)
2 3/8 6/8 (0.5)2(3/8)
3 1/8 3/8 (1.5)2(1/8)   ( x   ) p ( x)
2 2

 .28125  .09375  .09375  .28125 .75

2

  .75 .688
Note 5 of 5E
 Example
The probability distribution for x the
number of heads in tossing 3 fair
coins.
Symmetric;
• Shape? mound-shaped
• Outliers? None
• Center? m = 1.5
• Spread? s = .688

m
Note 5 of 5E
 Key Concepts
I. Experiments and the Sample Space
1. Experiments, events, mutually exclusive events,
simple events
2. The sample space

II. Probabilities
1. Relative frequency definition of probability
2. Properties of probabilities
a. Each probability lies between 0 and 1.
b. Sum of all simple-event probabilities equals 1.
3. P(A), the sum of the probabilities for all simple events in A

Note 5 of 5E
 Key Concepts
III. Counting Rules
1. mn Rule; extended mn Rule
2. Permutations: Prn  n!
(n  r )!
n!
3. Combinations: Crn 
r!(n  r )!
IV. Event Relations
1. Unions and intersections
2. Events
a. Disjoint or mutually exclusive: P(A Ç B) =
0
b. Complementary: P(A) = 1 - P(AC )
Note 5 of 5E
 Key Concepts
P( A  B)
P( A | B) 
3. Conditional probability: P( B)
4. Independent and dependent events
5. Additive Rule of Probability:
P ( A  B ) P ( A)  P ( B )  P ( A  B )

6. Multiplicative Rule of Probability:

P ( A  B ) P ( A) P ( B | A)

7. Law of Total Probability

8. Bayes’ Rule

Note 5 of 5E
 Key Concepts
V. Discrete Random Variables and Probability
Distributions
1. Random variables, discrete and continuous
2. Properties of probability distributions
0  p ( x) 1 and  p ( x) 1
3. Mean or expected value of a discrete random
variable: Mean :   xp( x)
4. Variance and standard deviation of a discrete
random variable: Variance :  2 ( x   ) 2 p( x)
Standard deviation :    2
Note 5 of 5E