ECON1005

INTRODUCTORY STATISTICS

Basic Probability
 Outline
• Why study probability?
• Important terminologies
• Types of probability
• Classical definition of probability
• Probability laws
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 Why study probability
• We live in a world riddled with uncertainty; no human being knows with certainty the outcome of
tomorrow or whether a particular event will occur.
• Note the following cases:
• “You are more likely to lose from cash pot.”
• “If you got fired, it is quite possible your girlfriend will cheat on you.”
• “There is a good chance that an earthquake will hit Jamaica this year and UN will send aid.”
• In fact, sometimes we place a number (a percentage or a fraction) on the likelihood of these
events occurring.
• In statistics, these uncertainties are precisely quantified and objectively measured. Therefore, we
calculate probabilities.
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 What is probability
Definition:
• More formally, Probabilities are numerical measures of uncertainty or
likelihood or the chance of something occurring.
• They are values between zero and one describing the relative possibility (or
likelihood) that an event will occur.
Example: What is the probability that I will get a tail when I flip a fair coin.
• The closer a probability is to zero (0), the more improbable or unlikely it is that
the event will occur.
• The closer the probability is to one (1), the more sure we are that the event will
occur.

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 Important
Terminologies I
• Random Experiment: any action, sequence of actions or an investigation from which
there may be several possible results.
• ¨But the question is “which result will it be?” …. and that’s the uncertainty we want to
measure. Almost everything we do in life is an experiment:
• Playing cash pot
• Checking up on your boyfriend/girlfriend sporadically (Stalking behavior)
• Tossing a coin
• Trying to hit a target
• Going to a new hair dresser this month
• Educating yourself in the hope of getting a better job

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 Important
Terminologies II
• Outcome: a particular result of any experiment.

• Sample space (represented by S): the set of all possible outcomes.

• Event: a group of outcomes (within a sample space) that is of interest to

the experimenter. A collection of one or more outcomes.
• An event describes a particular situation. An event is typically represented by a
capital letter, like A or B. The no. of outcomes in any event, say A, is written as
n(A).
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 1 2
Rolling
one (1)
dice

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 Example 1
• A box contains a certain number of computer parts, a few of which are defective. One part is selected at
random from this box and inspected to determine if it is good or defective. How many total outcomes
are possible? Draw a tree diagram for this experiment.
Solution:
How many total outcomes are possible? There are two (2) possible outcomes: Good or Defective.
Draw a tree diagram for this experiment. Good

Defective

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 Example 2
• If a fair coin is tossed three (3) times, what is the probability of getting tails at most three times?
Solution:
The sample space of one (1) fair coin flip is {H, T}. The sample space of a sequence of three fair coin flips
is all (𝟐𝟑 = 𝟖) possible sequences of outcomes: {HHH, HHT, HTH, HTT, THH, THT, TTH, TTT }.
Formula for sample space: To get the number of elements in the
sample space:
𝒏(𝒑𝒐𝒔𝒔𝒊𝒃𝒍𝒆 𝒐𝒖𝒕𝒄𝒐𝒎𝒆𝒔)𝒏(𝒆𝒙𝒑𝒆𝒓𝒊𝒎𝒆𝒏𝒕)
𝑷 𝑻 ≤ 𝟑 = 𝑷 𝑻 = 𝟎 + 𝑷 𝑻 = 𝟏 + 𝑷 𝑻 = 𝟐 + 𝑷(𝒕 = 𝟑)
∴ 𝟐𝟑 = 𝟖

So, the probability of getting tails at most three times is: 8/8 = 1 (given by the elements HHH, HHT,
HTH, HTT, THH, THT, TTH, TTT)
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Example 2 – Tree Diagram

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 Types of Probability
• Marginal probability: The likelihood that one (1) event will occur. For
example, what is the probability that it will rain tomorrow?
• Joint probability: The likelihood that two (2) or more events will occur
together or at the same time. For example, what is the probability that it will rain
tomorrow or the sun will shine? OR what is the probability you will get an A in Statistics
or Mathematics?
• Conditional probability: The likelihood that an event will occur given that
another event has already occurred. For example, what is the probability that it will
rain tomorrow given that the weather forecast said there is a 10% chance of rain? 11
 Classical Definition of Probability I –
Marginal Probability
S Figure 1 If sample space S consists of a number of equally likely outcomes,
A and there is an event A in S, as in Figure 1, the probability of event A
1 3 denoted as P(A), is
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𝑛(𝐴) 3 1
𝑃(𝐴) = = =
𝑛(𝑆) 6 2
4 2 6
𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒇𝒂𝒗𝒐𝒖𝒓𝒂𝒃𝒍𝒆 𝒐𝒖𝒕𝒄𝒐𝒎𝒆𝒔
In general: 𝑷𝒓𝒐𝒃𝒂𝒃𝒊𝒍𝒊𝒕𝒚 𝒐𝒇 𝒂 𝒔𝒊𝒏𝒈𝒍𝒆 𝒆𝒗𝒆𝒏𝒕 =
𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒑𝒐𝒔𝒔𝒊𝒃𝒍𝒆 𝒐𝒖𝒕𝒄𝒐𝒎𝒆𝒔

That is, it is the number of ways A can happen as a fraction of the number
of all possible ways. It is also called a marginal probability.
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 Example 1
For a die S={1, 2, 3, 4, 5, 6}. If the event A = {1, 3, 5} is the set of all odd
numbers between 1 and 6 inclusive, what is the probability of the event “odd
number of spots appearing face up” after rolling a die, i.e. P(A)?
Solution:
𝒏(𝑨) 𝐸𝑣𝑒𝑛𝑡 𝐴: 𝑡ℎ𝑒 # 𝑜𝑓 𝑜𝑑𝑑 𝑛𝑢𝑚𝑏𝑒𝑟𝑠 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 1 & 6 𝑖𝑛𝑐𝑙𝑢𝑠𝑖𝑣𝑒 3 1
𝑃 𝐴 = = = =
𝒏(𝑺) 𝑆𝑎𝑚𝑝𝑙𝑒 𝑠𝑝𝑎𝑐𝑒: 𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑛𝑢𝑚𝑏𝑒𝑟𝑠 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 1 & 6 𝑖𝑛𝑐𝑙𝑢𝑠𝑖𝑣𝑒 6 2

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 Example 2
Two thousand randomly selected adults were asked whether or not they have ever shopped on the
internet. The following table gives a two way classification of the response

Have Have never

Gender Totals
Shopped Shopped
Male 500 700 1200
Female 300 500 800

Totals 800 1200 ෍ = 𝟐𝟎𝟎𝟎

If one adult is selected at random from these 2000 adults, find the probability that this adult: (a) Is a
male (b) Is a female (c) Has never shopped on the internet (d) Has shopped on the internet.
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 Classical Definition of Probability II-
Joint Probability
S Figure 2
Let A be prime numbers Probability of
3 4
2
Let B be even numbers two (2) or
1
5 6 more events

• Also if there are events A and B in a sample space S, as in Figure 2 above, the probability of
events A and B (otherwise read as A intersect B), denoted as 𝑃 𝐴 ∩ 𝐵 ,
𝑛 (𝐴 ∩ 𝐵) 1
𝑃 𝐴 ∩𝐵 = =
𝑛 (𝑆) 6
That is the number of ways A and B can occur together as a fraction of the number of all
possible ways. It is also called a joint probability. 15
 Class Exercise 1
1. One child is chosen at random from a class of 30 children. The children are numbered 01, 02,…29, 30.
Lucy is number 12. What is the probability that: (a) Lucy is chosen (b) Lucy is not chosen and (c) a
child whose number is less than Lucy’s is chosen?

𝑷(𝑳) = 𝟏ൗ𝟑𝟎 𝑷(𝑳′ ) = 𝟐𝟗ൗ𝟑𝟎

𝑷(𝑿 < 𝟏𝟐) = 𝟏𝟏ൗ𝟑𝟎

2. A ball is drawn from a box containing 10 red, 15 black, 5 green and 10 yellow balls. Find the
probability that the ball is (a) black, (b) not green or yellow, (c) not yellow, (d) red or black or green,
(e) not blue.

𝑷(𝑩) = 𝟏𝟓ൗ𝟒𝟎 𝑷(𝒀′ ) = 𝟑𝟎ൗ𝟒𝟎

𝑷 𝑳′ = 𝟒𝟎ൗ𝟒𝟎 = 𝟏 𝑷(𝑹 ∪ 𝑩 ∪ 𝑮) = 𝟑𝟎ൗ𝟒𝟎

𝑷(𝑮 ∪ 𝒀)′ = 𝟐𝟓ൗ𝟒𝟎
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 Laws of Probability I
❑ The probability of any event A, that is, P(A) must lie between 0 and 1 inclusive
• If 𝑃(𝐴) = 1, the event is certain.
• If 𝑃(𝐴) = 0, the event is impossible.
❑ The sum of the probabilities of all simple events (or final outcomes) for an experiment is always 1, i.e. 𝑷(𝑺) = 𝟏

For example:
If persons that specialize in nursing are all females, then,
𝑃(𝑎 𝑓𝑒𝑚𝑎𝑙𝑒 𝑖𝑠 𝑠𝑒𝑙𝑒𝑐𝑡𝑒𝑑 𝑓𝑜𝑟 𝑎 𝑛𝑢𝑟𝑠𝑖𝑛𝑔 𝑝𝑟𝑜𝑐𝑒𝑑𝑢𝑟𝑒 ) = 1
𝑃(𝑎 𝑚𝑎𝑙𝑒 𝑖𝑠 𝑠𝑒𝑙𝑒𝑐𝑡𝑒𝑑 𝑓𝑜𝑟 𝑎 𝑛𝑢𝑟𝑠𝑖𝑛𝑔 𝑝𝑟𝑜𝑐𝑒𝑑𝑢𝑟𝑒) = 0

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 Probability Laws II –
The Complement Rule
❑ If events A and B are complements then:
𝑃 𝐴′ = 1 − 𝑃(𝐴) where 𝐴′ (read as A complement) denotes “not A”
and 𝑃 𝐴 + 𝑃 𝐴′ = 1

For Example:
In a class of 200 students, 50 students graduated with honors. Let A be the event that a student graduates with
honors. Then
𝟓𝟎
𝑷 𝑨 =
𝟐𝟎𝟎
Let 𝐴′ be the event that a student does not graduate with honors. Then,
′
𝟓𝟎 𝟏𝟓𝟎
𝑷 𝑨 = 𝟏− =
𝟐𝟎𝟎 𝟐𝟎𝟎
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 Probability Laws III-
Union of events/General Rule of Addition
• From an experiment we may be interested in finding the probability that one event A or another event B or
both events occurring (if possible)- read as “A union B”
• This is represented by the “blue + green + red” area in the Venn Diagram below:

• This probability is found by using the formula representing the rules of addition:
𝑃 𝐴 ∪ 𝐵 = 𝑃 𝐴 + 𝑃 𝐵 − 𝑃(𝐴 ∩ 𝐵)
i.e 𝑃 𝐴 𝒐𝒓 𝐵 = 𝑃 𝐴 + 𝑃 𝐵 − 𝑃(𝐴 𝒂𝒏𝒅 𝐵)
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 Class Exercise 2
1. In a group of 20 adults, 4 out of the 7 women and 2 out of the 13 men wear glasses. What is the
probability that a person chosen at random from the group is a woman or someone who wears
glasses?
𝐿𝑒𝑡 𝑃 𝑊 = 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑎 𝑝𝑒𝑟𝑠𝑜𝑛 𝑖𝑠 𝑎 𝑤𝑜𝑚𝑎𝑛
𝐿𝑒𝑡 𝑃 𝑀 = 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑎 𝑝𝑒𝑟𝑠𝑜𝑛 𝑖𝑠 𝑎 𝑚𝑎𝑛
𝐿𝑒𝑡 𝑃 𝐺 = 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑎 𝑝𝑒𝑟𝑠𝑜𝑛 𝑤𝑒𝑎𝑟𝑠 𝑔𝑙𝑎𝑠𝑠𝑒𝑠

𝑃 𝑊 ∪ 𝐺 = 𝑃 𝑊 + 𝑃 𝐺 − 𝑃(𝑊 ∩ 𝐺)

𝟕 𝟔 𝟒
𝑷 𝑾∪𝑮 = + − = 0.07857142857
𝟐𝟎 𝟐𝟎 𝟐𝟎
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 Probability Laws IV-
Mutually Exclusive Events
• If from an experiment, an event A can occur or an event B can occur but A and B cannot occur
together, then A and B are mutually exclusive. This result is shown in the figure below.

A B
S 1 3 2 6 Let A be odd numbers
5 4
Let B be even numbers
• The likelihood of A and B occurring together is impossible, therefore, 𝑷 𝑨 ∩ 𝑩 = 𝟎, where A ∩ B is
read as “A intersect B”. In this example a number cannot be even and odd at the same time.

• Special rule of addition- If two events are mutually exclusive so the intersection is zero. In this
case, if we wanted to determine the 𝑃 𝐴 ∪ 𝐵 or 𝑃 𝐴 or 𝐵 then
𝑃 𝐴 ∪ 𝐵 = 𝑃 𝐴 + 𝑃(𝑩)
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 Probability Laws V-
Conditional Probability
• If in an experiment, the occurrence of event A depends on the occurrence of event B, then
the probability of A given that B has already occurred is written as P(A|B) and computed
as:
𝑷(𝑨 ∩ 𝑩)
𝑷 𝑨𝑩 =
𝑷(𝑩)
• The above formula can be written as 𝑷 𝑨 ∩ 𝑩 = 𝑷 𝑨 𝑩 ∗ 𝑷(𝑩)
For example
To say that if you are a female doing statistics, then you have a good chance of doing well at your
exam, is a matter of conditional probability.
It means the P(doing well | female) is high. 22
 Class exercise 3
1. If P(A|B) = 2/5, P(B) = ¼, P(A) = 1/3, Find (a) P(A ∩ B), (b) P(B|A).

Solution:
𝑷(𝑨∩𝑩)
If 𝑷 𝑨 𝑩 = , then 𝑷 𝑨 ∩ 𝑩 = 𝑷 𝑨 𝑩 ∗ 𝑷(𝑩);
𝑷(𝑩)

𝟐 𝟏 𝟏
(a) So 𝑷 𝑨 ∩ 𝑩 = 𝟓 ∗ 𝟒 = 𝟏𝟎 = 𝟎. 𝟏

𝑷(𝑩∩𝑨) 𝑷(𝑨∩𝑩) 𝟎.𝟏

(b) 𝑷 𝑩 𝑨 = = = 𝟏ൗ = 𝟎. 𝟑
𝑷(𝑨) 𝑷(𝑨) 𝟑

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 Probability Laws VI-
Independent Events
• If in an experiment, event A occurs without being affected by event B, the occurrence of A is
independent of B. Therefore, 𝐏 𝐀 𝐁 = 𝐏(𝐀). The argument is the same vice versa. (i.e. 𝐏 𝑩 𝑨 =
𝐏(𝐁)
• (Note: That unlike mutually exclusive events, independent events can occur together, but its just that
one event occurring does not affect the other from happening)
• For example: if generally the probability of attending work is 0.9 for any particular day. And then one
day a man in Iraq shoots someone unrelated to you. Then, it is unlikely that since the Iraqi shoots the
person, the probability that you will attend work will change from 0.9.
• Further, if P(A|B) = P(A) is true, then it must also be true that
𝑷 𝑨 ∩ 𝑩 = 𝑷 𝑨 ∗ 𝑷(𝑩)
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 Class Exercise 4
1. Two events A and B are such that P(A)=1/4, P(A|B)=1/2 and P(B|A)=2/3.
a) Are A and B independent events?
Solution:
If A and B are independent then 𝑃(𝐴|𝐵) = 𝑃(𝐴) &/or 𝑃(𝐵|𝐴) = 𝑃(𝐵).
1 1
Note that: 𝑃 𝐴 𝐵 = 2 and 𝑃 𝐴 = 4. Since 𝑃(𝐴|𝐵) ≠ 𝑃(𝐴), then A and B are not independent.

b) Are A and B mutually exclusive events? .

Solution:
If A and B are mutually exclusive then 𝑷 𝑨 ∩ 𝑩 = 𝟎. Since the events are not independent, then 𝑷 𝑨 ∩ 𝑩 =
𝟐 𝟏 𝟐 𝟏
𝑷 𝑩 𝑨 ∗ 𝑷 𝑨 = 𝟑 ∗ 𝟒 = 𝟏𝟐 = 𝟔. Therefore the events are not mutually exclusive.
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