Module 1.

Introduction to Probability Theory

Student Notes 1.1: Basic Notions in Probability

Introduction to statistics
Q. What is Statistics?
Statistics is a science dealing with the collection, analysis, interpretation and presentation of
numerical data.
Statistics is used by
 by media for doing exit poll
 by docters to predict disease
 insurance companies to calculate the risk of giving insurance
 by businessmen for quality testing of products
 by financial market to know how to invest money and make money

The statistical methods we use for above tasks come from one of the two branches of statistics:
descriptive statistics and inferential statistics.
Descriptive statistics are the methods that help collect, summarize, present, and analyze
a set of data.
Inferential statistics are the methods that use the data collected from a small group to
draw conclusions about a larger group.

Mathematical basis for statistics: The discipline of mathematics which is the basis for statistics
is probability theory. The principles of probability help bridge the worlds of descriptive statistics and
inferential statistics.
Definition: Probability is the numeric value representing the chance, likelihood, or possibility
that a particular event will occur, such as the price of a stock increasing, a rainy day, a defective
product, or the outcome five dots in a single toss of a die.

Basic notions in probability

Terminologies:
1) Deterministic experiment : A deterministic experiment is one whose outcome may be
predicted with certainty.
For example: Consider ideal gas equation PV = RT, Where P is the pressure of gas, V is its
volume, T is its temperature and R is the gas constant. If we know value of any two of three
variables, then we know the value of third variable. A model like ideal gas equation is said to be
deterministic in the sense that it gives the exact value of variable of interest.

2) Non deterministic or Random experiment : A process that has well-defined outcomes but
these cannot be predicted with certainty.
Examples of Random experiments: i) Picking a card from a deck of 52 cards.
ii) Tossing a coin. iii) Rolling a fair die or a pair of dice.
3) Sample Space: The set of all outcomes of an random experiment, that is, a sample space for
an experiment is a set S with the property that each physical outcome of the experiment
corresponds to exactly one element of S. An element of S is called a sample point.
4) Event : Any subset of the sample space.
5) Mutually exclusive events : Mutually exclusive events are things that can’t happen at the
same time. For example, you can’t run backwards and forwards at the same time. The events
“running forward” and “running backwards” are mutually exclusive. Tossing a coin can also give
you this type of event. You can’t toss a coin and get both a heads and tails. So “tossing a heads”
and “tossing a tails” are mutually exclusive. 
Suppose sample space of an experiment S is the universal set and A , B be two events. Then
i) A∩B is intersection of two events i.e. occurrence of event A and event B.
ii) AᴜB is called union of two events i.e. occurrence of event A or event B.
iii) A and B are called mutually exclusive events if A ‫ ח‬B = ɸ.

Example 1: Experiment: Flip a coin

Sample space S = {H, T}, A= event of getting head = {H}.
Example 2: Experiment: Roll a fair die.
Sample space S = {1, 2, 3, 4, 5, 6}, E= event of getting all odd numbers = {1, 3, 5}.
Example 3: Experiment : Picking a card from a deck of 52 cards (not including Jokers) and
observing the face of the card.
Sample space S contains all 52 cards= { Ace of heart, 2 of heart, - - -}, A= event of getting a card
of spade= {Ace of spade, 1 of spade, - - - , king of spade}.
Example 4: Experiment: Toss 3 coins and observe the sequence of heads and tails then the
sample space S is S ={HHH , HHT , HTH, HTT ,THH ,THT ,TTH ,TTT }.
If we observe the number of heads then S={0,1,2,3}.
Example 5: Experiment: Toss two fair dice and observe the numbers on the top, the sample
space of this random experiment is
S= { (1,1), (1,2), (1,3), (1,4), (1,5), (1,6)
(2,1), (2,2), (2,3), (2,4), (2, 5), (2, 6)
:
(6,1), (6,2), (6,3), (6,4), (6, 5), (6, 6) }.
Let A be the event that sum of two numbers is 7 and B the event that sum of two numbers is 8.
Then A={(1,6), (2,5), (3,4), (4,3), (5,2), (6,1)} and B ={(2,6), (3,5), (4,4), (5,3), (6,2)}. Here
AnB= ɸ, so A and B are mutually exclusive events.
Example 6: Count the number of tosses of an unbiased die required to get the number 1 first
time. So the sample space of this experiment is S = {1,2,3, . . . }, since we may get 1 in the I toss
or in the II toss or so on.
Example 7: Count the life length of a device produced by a factory. Then S = {t | t ≥ 0}= [0, ∞).

Note : To see what we are observing or noting is an important part of random experiment.
Variation in this may change the sample space even when the procedure of experiment is same.
Accordingly, the subsets of sample space corresponding to an event may change. For instance,
in situation of example 6, consider the verbally described event. A= 1 did not occur in first five
tosses.
Experiment Sample space Event A
Observe trial no. on which the first 1 occurs S = {1, 2, 3, …} {6,7,…}

Observe no. of trials before first 1 occurs S*= {0,1,2,…} {5,6,…}

Enumeration of sample spaces and events

Counting: Sometimes enumeration of finite sample spaces can be simplified by using systematic
methods like tree diagrams.

Theorem: (Multiplication Principle)

If A1, A2, … , Ak contain n1, n2 , … , nk elements respectively then there are n 1 n2…nk ways of
choosing first an element of A1, then an element of A2, …and finally an element of Ak.

Example : If n1= 3, n2= 2 and n3= 3 then there are (3)(2)(3) = 18 ways of selecting .
Example : In how many ways can a local union with a membership of 25 choose a vice-
president and a president?
Solution: Firstly we can select a president from 25 members in 25 ways and then from the
remaining 24 members we can select a vice present in 24 ways.
Thus the total number of ways can a local union with a membership of 25 choose a vice-
president and a president is 25 X 24= 600

Permutation and Combination

Permutation: The selecting of r distinct objects from n distinct objects in an order or in a
particular way then it is called permutation. That is permutation is the number of arrangements
of r objects from n objects. It is denoted by

n!
n Pr =n ( n−1 ) ( n−2 ) … ( n−r +1 )=
( n−r ) !

Example: An electronic controlling mechanism requires 6 distinct, but interchangeable memory

chips. In how many ways can this mechanism be assembled by placing the 6 chips in the 6
positions within that controller?
Solution: n=6, r=6,No. of ways P = 6!/(6-6)! = 6.5.4.3.2.1/0! = 120/1 = 120 ways.

Combination : The number of ways in which r distinct objects can be drawn from a set of n
distinct objects is called combination and denoted by
n!
nCr = n =n ( n−1 )( n−2 ) … ( n−r + 1 ) /r !=
()
r r ! ( n−r ) !
Example : In how many different ways can 4 of 15 laboratory assistants be chosen to assist an
experiment?
Solution: The assistants can be chosen in any order. Here n = 15 and r = 4.
No. of ways = 15C4 = 15!/4!.11! = 1365

Probability in practice
Assigning Probabilities
Three ways of assigning probabilities to each outcome of random experiment:
1. Equally Likely: Assigning probabilities based on the assumption of equal likely outcomes.
Here we assume each outcome is equal likely to happen. This happens in a mathematical
experiment for example rolling a die. When we roll a die then every number has an equal
chance of appearing.
2. Relative Frequency Method: Assigning probabilities based on historical data.
3. Subjective Method: Assigning probabilities based on judgement.

1. Classical Concept of Probability/ Equally likely outcome

If in an experiment with n equally likely outcomes, m outcomes are favourable to an event A,
then the probability of occurrence of event A denoted by
P(A) = m/n.
We can write n(S) = number of elements of S and n(A) =number of elements of A, then
P(A)=n(A)/n(S).

Indicative terms : Equally likely outcomes can’t be expected every time. We need to perform
experiment is a specific way to ensure this.
For example :
• Well shuffled pack of cards
• Toss of fair coin
• Toss of a balance dice
• Random selection of a member, etc.
In practice, many a times this does not happen. So concept of classical probability is highly
restrictive.

2. Relative Frequency Method

Many a times, to determine the probability of an event, we repeat the random experiment a
large number of times. Then the probability can be given by the proportion of times the event
has occurred.
Number of trials of the experiment must be large. Larger the number of trials, closer is the
proportion to actual probability.
P(A)≈ f/n = (no. of trails with success)/ total no of trails
Example 1: What is the probability that there are 53 Sundays in a leap year?
Solution : No. of days in any leap year = 366.
There will be 52 full weeks in that year, as (52)(7)=364, counted from the beginning.
Remaining days in a leap year = 2.
These remaining days can be in the combination of {SS, SM, MT, TW, WTh, ThF, FS}, any of
these as likely as any other.
No. of favorable cases (i.e. containing Sundays) = 2.
Total no. of cases = 7. Hence required probability = 2/7
Example 2: A lottery sells tickets numbered from 00001 through 50000. What is the probability
of drawing a number that is divisible by 200?
Solution: S = set of ways we draw a number or lottery ticket.
A: ticket drawn is divisible by 200 (in 50000 only 250 tickets are divisible by 200).
Here n (S) = 50000 and n (A) = 250. Hence P (A) = n (A) / n (S) = 250 / 50000 = 1 / 200.
Example 3: A weather bureau has a data that out of 100 years of records of temperature in a
certain city, in 30 years the temperature went above 45 degrees Celsius. What is the probability
that the temperature will go above 45 degrees Celsius next year?
Solution: Here n(S)=100 as experiment is repeated 100 times.
A= the temperature went above 45 degrees Celsius. Then n(A)=30.
Hence by relative frequency P (A) = n (A) / n (S) = 30/100 =0.30.
Example 4: Among the 25 invoices prepared by a billing department, 5 contain error while the
other do not. If we randomly check 3 of these invoices, what are the probabilities that
(a) All three will contains errors
(b) Neither will contains an error
Solution: Total no. of way for selecting 3 invoices = 25C3
(a) A : Invoice contain error. All three invoices will contains error if we choose 3 invoices from
the 5 invoices that contains error and we choose 0 invoices from the 20 invoices that do not
contain error.
Thus the No. of way selected all three invoices contains error = 5C3 X 20C0
5C3 X 20C0 1
P ( A )= = .
25C3 230
(b) B: Invoice do not contain error. All three invoices will not contains error if we choose 3
invoices from the 20 invoices that do not contains error and we choose 0 invoices from the 5
invoices that contains error.
Thus the No. of way selected all three invoices that do not contains error = 5C0 X 20C3
5 X 20C3 57
P ( B )= C0 = .
25 C3 115
3. Subjective Method:
Often managers use their experience and intuition (and the data available) to assign
probabilities. The probabilities represent their belief in the likelihood of the events
Usually, probability estimates are based on the Relative Frequency approach together with the
subjective estimate.
Example: The firm will shortly launch a variant of the existing model. R&A assigned the
following probabilities to the possible market share by year-end:
P(5%) = 20%, P(10%) = 55% and P( 15%) = 25%.
VP Marketing modified the numbers as follows:
P(5%) = 25%, P(10%) = 40% and P( 15%) = 35%.

Learning Outcome:
Two branches of statistics: Descriptive and inferential statistics. Use of statistics.
Basic notions in probability theory: Random Experiment, Sample Space, Event, Union of two
events, Intersection of two events, Mutually Exclusive events.
Counting principle: multiplication rule , permutation and combination.
Ways of assigning probabilities and examples.

Questions to be considered:
Q1. What is a random experiment?
Q2. What is sample space of a random experiment?
Q3. What is an event and mutually exclusive event?
Q4. What is the multiplication principle for counting?
Q5. What is permutation and combination?
Q6. What are the ways of assigning probabilities?