Chapter 5

A Survey of Probability Concepts

1
 Goals
• Probability Concepts
1. Define probability
2. Understand the terms:
• Experiment
• Outcome
• Event
3. Describe these approaches to probability:
• Classical
• Empirical
• Subjective
2
 Goals
• Probability Concepts
4. Calculate probabilities applying these rules:
• Rules of addition
• Rules of multiplication
5. Define the terms:
• Conditional probability
• Joint probability
6. Contingency Tables
7. Use a tree diagram to organize and compute
probabilities
8. Principles of Counting
3
 Types Of Statistics

 Inferential Statistics
 A decision, estimate, prediction, or
generalization about a population, based on
a sample
 (Second part of definition of statistics)
 Also known as:
 Statistical inference
 Inductive statistics

4
 Statistical Inference Or
Inferential Statistics
 Computing the chance that something will
occur in the future!
 This means that we will have to make
decisions with incomplete information
 Seldom does a decision maker have complete
information from which to make a decision:
 Marketers taking samples about a product name
 Tests for wire tensile strength
 Which player should the Mariners draft?
 Should the soap opera Days of Our Lives be
discontinued immediately?
 Should I marry Jean? 5
 Future Uncertainty
 “Because there is uncertainty in decision
making, it is important that all the known
risks involved be evaluated scientifically”

 Probability Theory will help:

 Decision makers with limited information
analyze the risks and minimize the inherent
gamble

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 Define Probability
 “Chance,” Likelihood,” Probability”
 A number between zero & one, inclusive,
describing the relative possibility (chance
or likelihood) an event will occur in the
future
 Decimal or fraction: .25 = ¼, etc.
 0 ≤ P (x) ≤ 1
x means “the event”
P means probability

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
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• Define Probability
1. A value of zero means it
cannot happen
2. A value near zero means
the event is not likely to
happen
3. A value of one means it is
certain to happen
4. A value near one means it
is likely
• Probability
 Is the probability that a
World Series will happen
in 2006 close to one or to
zero?
 Is the probability that a
company will name a new
breakfast cereal “Crud
That Hurts Your Tummy”
close to one or to zero?
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 Understand The Terms:

• Experiment
• Doing something and observing the one result
• Outcome
• A particular result of the experiment
• Event
 A collection of one or more outcomes of an
experiment

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 Define: Experiment
 A process that leads to the occurrence of one
and only one of several possible observations
 Example: roll die & there are 6 possible
outcomes
 Ask 250 Highline students whether they
drink coffee
 An experiment has two or more possible
results (outcomes), and it is uncertain which
will occur
 An experiment is the observation of some
activity or the act of taking some
measurement
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 Define: Outcome
 An outcome is the particular result of an
experiment
 Examples:
 When you toss a coin, the possible outcomes are:
 Heads
 Tails
 When you survey 1000 people and ask whether they
will vote for candidate 1 or candidate 2, some of the
possible outcomes are:
 455 would vote for candidate 1
 592 would vote for candidate 1
 780 would vote for candidate 1…
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 Define: Event
 When one or more of the experiment’s outcomes
are observed, we call this an event!
 An event is the collection of one or more
outcomes of an experiment
 Example:
 Roll die:
 An even number can be an event
 Boomerang tournament:
 More than ½ the participants earned more than 60 points in
the Trick Catch event
 Political poll:
 Less than 50% of those polled said they would vote for
candidate A
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 Experiment, Outcome, Event

Count the number of

Experiment Roll a die students in the sample who
drink coffee

Observe a 1 None drink coffee

Observe a 2 1 drink coffee
Observe a 3 2 drink coffee
Observe a 4 …
All Possible Outcomes Observe a 5 43 drink coffee
Observe a 6 …
…
181 drink coffee
…
Observe an odd number More than 43 drink coffee
Some Possible Events Observe a number greater than 5 43 drink coffee
Observe a number 3 or less less than 43 drink coffee 13
 Definitions
 Sample Space
 A representation (list) of all possible
outcomes in an experiment
 It can be hard to list all the outcomes

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 Venn Diagram
Sample Space

Event A
P(A) =.2

A

•Sample Space is all outcomes = P(x) = 1

•Compliment P( A) = 1 – P(A) = 1 – .2 = .8
•P(A) + P(~A) = 1 or P(A) = 1 - P(~A) 15
 Define: Mutually Exclusive
Ch 5 Mutually Exclusive:
 The occurrence of one
event means that none
of the others can occur
at the same time
 Two events, A & B, are
mutually exclusive if
both events, A & B,
cannot occur at the
same time
 In Venn Diagrams, there is no
intersection:
Even
 Examples:
 Die tossing experiment:
the event “an even
number” and the event
“an odd number are
mutually exclusive
 If you get an odd, it cannot
also be even
 You can not have a
product come off the
assembly line that is both
defective and satisfactory
Odd
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 Definitions
 Collectively Exhaustive
 At least one of the events must occur when an
experiment is conducted
 If an experiment has a set of events that include
every possible outcome, such as the events “an
even number” and “an odd number,” then the set of
events is collectively exhaustive
 Mutually Exclusive & Collectively
Exhaustive
If a set of events is mutually Probability
exclusive & collectively
exhaustive, then the sum of the Event: Head 0.5
probabilities are equal to 1 Event: Tail 0.5
Total 1

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 Definitions
 Independent
 Events are independent if the occurrence of one
event does not affect the occurrence of another
(sample space is not changed)
 The roll of a six, does not affect the next roll
 P(B│A) = P(B)
 Dependent
 Events are dependent if the occurrence of one event
affects the occurrence of another event (sample
space is changed)
 The chances of pulling a heart from a deck of cards? 13/52.
But if you don’t put the card back (without replacement), what
is the probability that you pull a heart next time? It depends:
 13/51 or 12/51
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 Definitions
 Conditional Probability
 The probability of a particular event occurring,
given that another event has occurred
 The sample space will change
 The probability of the event B given that
the event A has occurred is written P(B|A)
 In the heart example, 13/51 or 12/51 are
conditional probabilities Line means “given that.”
“Probability that B will
occur given that A has
already occurred” 19
Definitions
 Joint Probability
 A joint probability measures the likelihood that
two or more events will happen concurrently
 An example would be the event that a student has
both a DVD Player and TV in his or her dorm room

Root probabilities
Sample times conditional
Space probabilities equal
Has a Has a joint probabilities
DVD TV (Tree Diagrams)
player

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21
Classical Approach To Probability
The Classical definition applies when there
are n equally likely outcomes
 Each outcome must have the same chance of
occurring (fairness)
 Events must be mutually exclusive &
collectively exhaustive

Definition of Number of favorable outcomes

Probability
Classical = =
of an event Total number of possible
Probability
outcomes

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 Classical Approach To Probability
A fair die is rolled once.
 The experiment is rolling the die.
 The possible outcomes are the numbers 1, 2, 3,
4, 5, and 6.
 An event is the occurrence of an even number.
That is, we collect the outcomes 2, 4, and 6.

P(Roll die and get an odd number) = ?

Number of favorable outcomes = 3
Total number of possible outcomes = 6
P(Roll die and get an odd number) = 3/6 = 0.5
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 Classical Approach To Probability
 We do not need to conduct experiments to
determine the probability under the classical
approach? No!
 Cards, dice, taxes
 Example:
 If three million returns are sent to your district
office and 3000 will be audited the probability
that you will be audited is:
Mutually Exclusive? Yes: Audited Not Audited
Collectively Exhaustive? Yes: 3000 2997000
P(Get audited) = ?

P(Get audited) = 3000/3000000 = 0.00100

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 Empirical Approach To Probability
 The empirical definition applies when the number
of times the event happens (in past) is divided by
the number of observations
 The probability of an event happening is the fraction of
the time similar events happened in the past.
 “Relative Frequency”
 Law of Large Numbers: Over a large number of
trials the empirical probability of an event will
approach its true probability. This law allows us to
use relative frequencies to make predictions.

Number of times event

Definition of Probability
occurred in past
Empirical = of an event =
Probability happening Total number of observations
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 Empirical Approach To Probability
Throughout her teaching career Professor Jones has
awarded 186 A’s out of 1,200 students. What is the
probability that a student in her section this semester will
receive an A?
 To find the probability a selected student will earn an A:

186
P( A)   0.155
1200

Based on past experience, we can estimate that the

probability that a student will receive an A grade in a future
class is .155
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Subjective Approach To Probability
• Subjective probability
• There is little or no past experience on which to
base probability
• An individual assigns (estimates) a probability
based on whatever information is available
• Examples:
• Estimate the probability that the Mariners will the
World Series next year
• Estimate the probability that AOL will merge with
GOOGLE
• Estimate the probability that a particular
corporation will default on a loan
• Estimate the probability mortgage rates will top 8
percent 27
 Probability
 P(x) is never known with certainty
 P(x) is an estimate of an event that will occur in
the future
 There is great latitude in the degree of uncertainty
surrounding this estimate
 The degree of uncertainty is primarily based on
the knowledge possessed by the individual
concerning the underlying process
 We know a great deal about rolling die
 The underlying process is straight forward
 We may not know much about whether a merger
between companies will occur
 Only some parts of the underlying process are known
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 Probability
 The same laws of probability will be used
regardless of the level of uncertainty
surrounding the underlying process
 Individuals will assign probabilities to events of
interest
 The difference amongst them will be in their
confidence in the precision of the estimate

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 And
And = Both =  = Intersection
Or
Or = Either Or or Both
=  = Union
(inclusive or)
Joint Probability

P(A and B)
Sample
Space Event A
Has a Event B
DVD In this
Has a TV
player player circumstance,
Events A & B are
not mutually
exclusive!
P(A or B) 30
 Calculate Probabilities Applying
These Rules:
• Rules of addition
• Rules of multiplication

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 Rules Of Addition
P(A and B)

Event A Event B
P(A) P(B)

P(A or B)
General Rule
of Addition P(A or B) = P(A) + P(B) - P(A and B)

Why? Don’t want to count twice!

P(X)  1 HW #22, page 152 “at least one” = “either or”
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 Rules Of Addition
Mutually Exclusive!

Event A Event B
P(A) P(B)

P(A or B)

General Rule
of Addition P(A or B) = P(A) + P(B) - P(A and B)
Special Rule
of Addition P(A or B) = P(A) + P(B)
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 Rules Of Addition Example 1
 New England Commuter Airways recently
supplied the following information on their
commuter flights from Boston to New York:
Arrival Frequency
Early 100
On Time 800
Late 75
Canceled 25
Total 1000
 Rules Of Addition Example 1
Arrival Event Frequency P(X) P(X)
Early E 100 P(E) 0.1000
On Time O 800 P(O) 0.8000
Late L 75 P(L) 0.0750
Canceled C 25 P(C) 0.0250
1000 1

P(Early or On Time) = P(E or O) = 0.1000 + 0.8000 = 0.9000

P(Not Canceled) = P(Not C) = 1.0000 - 0.0250 = 0.9750

P(Early or Late) = P(E or L) = 0.1000 + 0.0750 = 0.1750

 Rules Of Addition Example 2
 In a sample of 500 students:
 320 said they had a music sound system P(S)
 175 said they had a TV P(TV)
 100 said they had both P(S and TV)
 5 said they had neither

TV
175
Both
S 100
320
In this circumstance,
Events P(S and TV)
What is the sample space? are not mutually
exclusive!
 Rules Of Addition Example 2
 If a student is selected at random, what
is the probability that the student has:
 Only a music sound system
 Only a TV
 Both a music sound system and TV

P(S) = 320/500 = .64

P(TV) = 175/500 = .35
P(S and TV) = 100/500 = .20
 Rules Of Addition Example 2
If a student is selected at random,
what is the probability that the:
Student has only a music sound
system or TV?
Student has both a music sound
system and TV?

P(S or TV) = P(S) + P(TV) - P(S and TV)

= 320/500 + 175/500 – 100/500
= .79
P(S and TV) = 100/500
= .20
 Special Rule Of Multiplication
The special rule of multiplication requires that
two events A and B are independent

Two events A and B are independent if the

occurrence of one has no effect on the probability
of the occurrence of the other

Special Rule
of Multiplication P(A and B) = P(A) * P(B)
 IBM 5-year stock prices
GE

Special Rule Of Multiplication 45

40
35

Example 1 30

Stock price $
25
20
15

 Chris owns two stocks: 10

5
0

1. IBM 1 2 3
Year
4 5

2. General Electric (GE)

 The probability that IBM stock will increase
in value next year is .5
 The probability that GE stock will increase
in value next year is .7
 Assume the two stocks are independent
 What is the probability that both stocks will
increase in value next year?
 P(IBM and GE) = (.5)(.7) = .35
 Special Rule Of Multiplication Example 2

 If the probability of selecting a finished

boomerang with a blemish in the paint job is
.02, what is the probability of randomly
selecting four boomerangs from the
production line (boomerangs just rolling off
the line) and finding all four blemished?
 Because there are so many, we can assume
independence
 P(selecting 1 boom with blemish) = .02
 P(selecting 4 booms with blemish) = .02*.02*.02*.02=.000000160
 General Multiplication Rule
 The general rule of multiplication is used to
find the joint probability that two events will
occur
 It states that for two events A and B, the
joint probability that both events will
happen is found by multiplying the
probability that event A will happen by the
conditional probability of B given that A has
occurred

General Rule
of Multiplication P(A and B) = P(A) * P(B|A)
General Multiplication Rule Example 1
 Now you have ten boomerangs and two of them have
blemishes
 We want to select one after the other
 What is the probability of selecting a blemished boom
followed by another blemished boom?
 The sample space will change (without replacement)
 The second P(X) is dependent on the first
 P(Bblemish1)* P(Bblemish2) = 2/10*1/9 = 2/90  .0222
 Example 2:
 In class example with women & men: what is the probability
of selecting from a hat the names of three women
 10/20*9/19*8/18 = .105263158
 In Class
Women in class Men in class Conditional Probabilities
10 10 1/2 = 0.500
9 9 9/19 = 0.474
8 8 4/9 = 0.444
7 7 7/17 = 0.412
6 6 3/8 = 0.375
5 5 1/3 = 0.333
4 4 2/7 = 0.286
3 3 3/13 = 0.231
2 2 1/6 = 0.167
1 1 1/11 = 0.091

Joint Probabilities
P(Selecting 1 straight women - without replacement) = 1/2 = 0.5000000
P(Selecting 2 straight women - without replacement) = 9/38 = 0.2368421
P(Selecting 3 straight women - without replacement) = 2/19 = 0.1052632
P(Selecting 4 straight women - without replacement) = 14/323 = 0.0433437
P(Selecting 5 straight women - without replacement) = 21/1292 = 0.0162539
P(Selecting 6 straight women - without replacement) = 7/1292 = 0.0054180
P(Selecting 7 straight women - without replacement) = 1/646 = 0.0015480
P(Selecting 8 straight women - without replacement) = 3/8398 = 0.0003572
P(Selecting 9 straight women - without replacement) = 1/16796 = 0.0000595
P(Selecting 10 straight women - without replacement) = 1/184756 = 0.0000054
A contingency table is
used to classify
observations according to
two identifiable
characteristics.
Contingency tables are used
when one or both variables are
nominally or ordinally scaled.
A contingency table is a
cross tabulation that
simultaneously
summarizes two variables
of interest.
 General Multiplication Rule Example 2
Contingency Table (Cross-classified)
Executives were asked whether or not they would remain with the
company if they received a better offer from a different company

Length of Service
Less than 1-5 6-10 More than
Loyalty 1 year years years 10 years Total
Would remain 10 30 5 75 120
Would not remain 25 15 10 30 80
Root Conditional Joint 200
Probability Probability Probability
P(Randomly selecting
executive who Would
= 120/200 * 75/120 = 0.6 * 0.625 = 0.375
remain and who has More
than 10 years)
P(Randomly selecting
executive who Would not = 80/200 * 30/80 = 0.4 * 0.375 = 0.15
remain and who has More
than 10 years)
 General Multiplication Rule Example 2
Contingency Table (Cross-classified)
Executives were asked whether or not they would remain with the
company if they received a better offer from a different company

Length of Service
Less than 1-5 6-10 More than
Loyalty 1 year years years 10 years Total
Would remain 10 30 5 75 120
Would not remain 25 15 10 30 80
200
80/200 35/200

Addition Rule:
P(Would Not Remain or Has Less Than 1 Year Experience) =
80/200 + 35/200 – 25/200 = 90/200 = .45
P(Select 1-5 Years Experience) = 45/200
P(Would Not Remain given that 1-5 Years) = 15/45
 Use A Tree Diagram To Organize And Compute
Probabilities
• Each segment of the tree is one stage in the problem
• The branches of a tree diagram are weighted by
probabilities
Steps:
1. Draw heavy dots on left to represent the root of the
tree
2. Two main branches are drawn with “root probabilities”
3. Create branches for each conditional probability
4. Write out Joint Probabilities

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 Draw Heavy Dots On Left To Represent The
Root Of The Tree & Draw Two Main Branches
With “Root
Loyalty
Probabilities”
Conditional P(X) Service Joint P(X)

10/120 Less than 1 year 120/200 * 10/120 = 0.05000

Root P(X) 30/120 1-5 years 120/200 * 30/120 = 0.15000

120/200 Would remain 5/120 6-10 years 120/200 * 5/120 = 0.02500

75/120 More than 10 years 120/200 * 75/120 = 0.37500

 Σ 1.00000

25/80 Less than 1 year 80/200 * 25/80 = 0.125

80/200 Would not remain
15/80 1-5 years 80/200 * 15/80 = 0.075
Σ 1.00000
10/80 6-10 years 80/200 * 10/80 = 0.05

30/80 More than 10 years 80/200 * 30/80 = 0.15

Σ 1.00000 Σ 1.00000
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 Create Branches For Each Conditional
Probability
Loyalty Conditional P(X) Service Joint P(X)

10/120 Less than 1 year 120/200 * 10/120 = 0.05000

Root P(X) 30/120 1-5 years 120/200 * 30/120 = 0.15000

120/200 Would remain 5/120 6-10 years 120/200 * 5/120 = 0.02500

75/120 More than 10 years 120/200 * 75/120 = 0.37500

 Σ 1.00000

25/80 Less than 1 year 80/200 * 25/80 = 0.125

80/200 Would not remain
15/80 1-5 years 80/200 * 15/80 = 0.075
Σ 1.00000
10/80 6-10 years 80/200 * 10/80 = 0.05

30/80 More than 10 years 80/200 * 30/80 = 0.15

Σ 1.00000 Σ 1.00000
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 Write Out Joint Probabilities
Loyalty Conditional P(X) Service Joint P(X)

10/120 Less than 1 year 120/200 * 10/120 = 0.05000

Root P(X) 30/120 1-5 years 120/200 * 30/120 = 0.15000

120/200 Would remain 5/120 6-10 years 120/200 * 5/120 = 0.02500

75/120 More than 10 years 120/200 * 75/120 = 0.37500

 Σ 1.00000

25/80 Less than 1 year 80/200 * 25/80 = 0.125

80/200 Would not remain
15/80 1-5 years 80/200 * 15/80 = 0.075
Σ 1.00000
10/80 6-10 years 80/200 * 10/80 = 0.05

30/80 More than 10 years 80/200 * 30/80 = 0.15

Σ 1.00000 Σ 1.00000
51
 Don’t Forget To Extend The Rules:
Special Rule
of Addition P(A or B or C) = P(A) + P(B) + P(C)

Special Rule
of Multiplication P(A or B or C) = P(A) * P(B) * P(C)

General Rule
of Multiplication P(A and B and C) = P(A) * P(B|A) * P(C|A and B)

52
 Some Principles Of Counting
1. Multiplication Formula
2. Combination Formula
3. Permutation Formula

53
 Multiplication Formula
 The multiplication formula indicates that if
there are m ways of doing one thing and n
ways of doing another thing, there are m x n
ways of doing both
 m x n indicates the number of ways they can be
done in sequence, or the number of outcomes, or
number of arrangements

Example: Dr. Delong

has 10 shirts and 8 ties.
How many shirt and
tie outfits does he
have?
(10)(8) = 80
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 n! = n Factorial

 5! = 1*2*3*4*5 = 120
 5!/3! = 1*2*3*4*5/1*2*3 = 4*5 = 20
 Use your Calculator
 Use Excel Functions (see page 169)
 ******Note
 0! = 1

55
 Combinations
Order Not Important

A combination is the number of ways to choose r

objects from a group of n objects without regard
to order

 Note: The order of arrangement is not important

in permutations
 a, b, c is same as b, c, a

n!
nCr 
r! (n  r )!
56
 Combination Example
There are 12 players on the Highline
basketball team. Coach Che Dawson must
pick five players among the twelve on the
team to comprise the starting lineup. How
many different groups are possible?

12!
12C 5   792
5! (12  5)!

57
 Permutations
Order Important
A permutation is any arrangement of r objects
selected from n possible objects

 Note: The order of arrangement is important in

permutations
 a, b, c is not the same as b, c, a

n!
n Pr 
( n  r )!
58
 Permutations Example

Suppose that in addition to selecting the group,

Che Dawson must also rank each of the players
in that starting lineup according to their ability

12!
12 P 5   95,040
(12  5)!

59
 Law of Large Numbers

Suppose we toss a fair coin. The result of each toss is either a

head or a tail. If we toss the coin a great number of times, the
probability of the outcome of heads will approach .5. The
following table reports the results of an experiment of flipping a
fair coin 1, 10, 50, 100, 500, 1,000 and 10,000 times and then
computing the relative frequency of heads

60