SUBJECT:

“BUSINESS STATISTICS”
COURSE INSTRUCTOR:
“DR. ZAHID AHMAD”
COURSE CODE:
“BAAF2243”
SECTION:
“B”
ASSIGNMENT NO “3”
TITLE: “WRITE A NOTE ON PROBABILITY AND RANDOM
VARIABLE AND ITS PROBABILITY DISTRIBUTION”
NAME: “HAMNA FAROOQ”
REGISTRATION NO: “L1S20BBAM0107”
PROBABILITY:
Experiment: An action which is well defined, obvious and apparent and gives the same result
on each trial is called experiment.
Example: Performing chemical reaction in laboratory
Trial: The performance of a well-defined experiment is known as trial.

Random Experiment: Random experiment is such an experiment which yields different

results even when it is performed under the same conditions every time it is performed.
Example: Throwing a dice

Sample Space: Sample space is the set of possible outcomes of a random experiment and it is
denoted by S.
Example: Throwing a dice: [ 1, 2, 3, 4, 5, 6] so n(S)=6

Event: Event is the single outcome taken out from a sample space which is obtained by a
random experiment.

Example: Throwing a dice: [ 1, 2, 3, 4, 5, 6]. Then the event will be [1] or any number and can
be denoted by any alphabet.

Mutually Exclusive Events: These are two events said to be the event A and event B which can
never occur together.
Example: In throwing a dice there will be only one number can occur ranging from 1 to 6. Two
numbers cannot occur together.

Equally likely Events: If the events in a sample space obtained from a random experiment have
the equal chances of occurring, then it is known as equally likely events.

For example: When the dice is thrown every number ranging from 1 to 6 have equal chances of
occurrence.

Independent Event: When the occurrence and non-occurrence of any event does not depend
on whether any other event occurred or not then the event is said to be independent.

Example: When a dice is thrown, any number ranging from 1 to 6 can occur as it is not
dependent on the occurrence of a specific number.

Dependent Event: When the occurrence and non-occurrence of any event dependent on
whether any other event occurred or not then the event is said to be dependent.

Example: When we have to draw two coins from a bag of 6 coins in which there are 3 kinds of
currencies in the form of coins. Two coins are in the Pakistani currency, two in the Indian rupee
and two are Saudi Riyals then the first draw of a coin can affect the occurrence of the draw of the
second coin in the form of increasing or decreasing a currency in the bag.

Combination: A combination is the segment denoted by r selected from a set of different

objects which is n where the order does not matter. It is denoted by nCr or nr.
𝐧!
𝐧𝐫 = 𝐫 ! ( 𝐧−𝟏 )!

Example: 5! / 2!3!
=5*4*3! / 2*1*3!
= 20/2
= 10
Factorial is denoted by !

THREE DEFINITIONS OF PROBABILITY:

1. Classical definition: When a random experiment performed then mutually exclusive and
equally likely outcomes which are denoted by n are produced and from these outcomes some
are considered as favorable and denoted by m for the occurrence of the certain event which is A
then the probability of the event is calculated as P(A)= m/n where m is the favorable outcomes
and n is the total possible outcomes of an experiment.

2. Relative Definition / Empirical Definition: According to this definition the probability of

event A is stated as

Limit
𝐦
P (A) = 𝐧 → ∞ 𝐧

Which says that random experiment is performed a large number of times which is n and the
event A is occurred as m times.

3. Subjective Definition: In this definition, it is the strength which says that how much a person
believes about the occurrence of a certain event. It has a drawback which is that two persons
having some beliefs may yield different probabilities.

Question 1: A dice is rolled. What is the probability of getting?

a) Number 6
b) No number 6
c) At least number six will occur one time
S = {1,2,3,4,5,6}
n (S) = 6

a) Number 6
Let A, The event that number 6 occurs
So n= 1
P(A)= 1/6

b) No number 6
Let B the event that no number 6 will occur
n(B)=5
P(B)= 5/6

c) At least number six will occur one time

Let C the event that at least number six will occur one time
n(C)=1

P(C)= 1/6

Question no 2: There are eight pencils in a box in which four are of green color and four
are of orange color. If 4 pencils are taken from the box, find the probability that among
these selected pencils 2 are of green color and 2 are of orange color?

S = (84) = 70

Let A represent the event that 2 are of green color and 2 are of orange color:

A = (42)(42)

n (A) = 6*6 =36

36 𝟏𝟖
Then P (A) = =
70 𝟑𝟓

LAWS OF PROBABILITY:
There are four laws of probability in which there are two laws for addition and two laws for
multiplication.
Addition laws are:

P (A∪B) = P(A) + P(B) For “Mutually Exclusive Events”

P (A∪B) = P(A) + P(B) – P(A∩B) For “Not Mutually Exclusive Events”

Such questions are identified by the words like or, at least, at most, either, neither, nor.
These laws represent the union of two events.

Example 1: A number is chosen from first 100 even numbers randomly. What is the
probability that the chosen number is divisible by 4 or by 10?
S = {2,4,6,8….100}
n (S) = 10

i. Let A represent the event that number chosen is divisible by 4.

n (A) = 100/4
n(A)=25

ii. Let B be the event that number chosen is divisible by 10.

n (B) = 100/10
n(B)=10

iii. (A∩B) be the event that integer chosen is divisible by 4 and 10 both.
That digit is 20.
𝟏𝟎𝟎
n (A∩B) = =5
𝟐𝟎

P (A∪B) = P (A) + P (B) – P (A∩B)

𝟐𝟓 𝟏𝟎 𝟓 𝟑𝟎 𝟑
= 𝟏𝟎𝟎 + 𝟏𝟎𝟎 - 𝟏𝟎𝟎 = 𝟏𝟎𝟎 = 𝟏𝟎

Example 2: What is the probability on rolling a die that we either got a 6 or 3?

S= {1,2,3,4,5,6}
n(S)= 6
Let A, the event that we got a 6:
n(A) =1
P(A) =1/6
Let B the event that we got a 1:
n(B) =1
P(B) =1/6
Then according to the law:
P (A∪B) = P (A) + P (B)

P (A∪B) = 1/6 + 1/6

P (A∪B) = 2/6 = 1/3

Multiplication laws:
P(A∩B) = P(A) ∙ P(B) For independent events

P(A∩B) = P(A) ∙ P(B/A) For dependent events

This sign “/” is called as Given.

These laws show the intersection between two events. And are identified by the words joint,
both occurring, simultaneously.

Example: The probability that A will cook fish this winter is 3/7 and B will cook fish in this
winter is 6/4. What is the probability that both of them will cook fish?
Let A represent both will cook fish
P (A∩B) = P (A) ∙ P (B)
𝟑 𝟔
=𝟕∗𝟒
𝟏𝟖
= 𝟐𝟖

Example: A bag contains 5 defectives and 5 good bulbs. 2 are drawn and one of them is
tested and found to be bad. What is the probability that other two is also bad?
Bag contains= 5 Defective + 5 Good = 10
5
P (defective) = 10
5
P (good) = 10

Let A be the event that 1st item is defective.

5
P (A) =
10
Now since in the box there are 4 defective bulbs remaining because we have checked it.
4
Let (𝐵⁄𝐴) = 9

Then by multiplication law:

P (A∩B) = P (A) ∙ P (𝑩⁄𝑨)

 5 4 20 𝟐
= 10 * 9 = 90 = 𝟗

Bay’s Theorem:
Statement: When the event A1, A2, ……. Ak forms a partition of the sample space S, such that
the events Ai are mutually exclusive and their union forms S and if B is such an another event of
S such that B can occur only once of the Ai occurs so than for any i
𝐁
𝐏 (𝐀𝐢 ) ∙𝐏 ( ⁄𝐀 )
𝐀
P ( 𝐢⁄𝐁) = (𝐀 ) 𝐁 𝐢
Ʃ𝐏 𝐢 ∙ 𝐏 ( ⁄𝐀
𝐢)

Example: In a stitching factory, three workers A, B and C stitch shirts with the probability
of 35, 45 and 20 percent respectively. Out of their outputs 3, 5 and 4 percent represents
torn shirts. A shirt is bought by a customer and found to be torn. What is the probability
that the shirt is made by worker B?
P (A) = 0.35
P (B) = 0.45
P (C) = 0.20
Let E represent the event that shirt is torn.
Then the conditional probabilities are
P (E/A) = 0.03
P (E/B) = 0.05
P (E/C) = 0.04.
Then by Bay’s Theorem
𝑷 (𝑩) ∙𝑷 (𝑬⁄𝑩)
P (𝑩⁄𝑬) = 𝑷 (𝑨) ∙𝑷 (𝑬⁄𝑨)+ 𝑷 (𝑩) ∙𝑷 (𝑬⁄𝑩)+ 𝑷 (𝑪) ∙𝑷 (𝑬⁄𝑪)

(0.45) ∙ (0.05)
P (𝐵⁄𝐸 ) = (0.35)(0.03) + (0.45)(0.05) + (0.20)(0.04)

=0.0225/ (0.0105+0.0225+0.008)
=0.0225/0.041

P (𝑩⁄𝑬) = 0.0635

RANDOM VARIABLE:
Variable: It’s value can vary from one place, object and individual to another.
Example: Weight, Height, age etc.
Random Variable: It is such a variable whose numerical value can be determined from the
result of a random experiment. In probability, a variable is called a random variable. The
abbreviation of random variable is “r.v” and it is denoted by x, y, z, or any alphabet.

Distribution Function: It is the function of the random variable which is denoted by F(x). The
function states that:

F(x) = P (x≤x).
It defines that the function of the event gives the probability that x can value a value which is
equal to the value of x or less than the value of x. The abbreviation of Distribution function is
d.f and it is also known as Cumulative Distribution Function (cdf).

Discrete Random Variable: A variable is called a discrete random variable which is

countable and takes a specific value within a given interval.

Probability Distribution Of Discrete Random Variable: Probability distribution of discrete

random variable is defined as representation of specified values of the random variable x along
with their respective probabilities in a table.

Example: In a factory, 10 shirts are made on daily basis. 4 shirts are found to be torn.
Customer checks 3 shirts for purchasing. What is the probability distribution of shirts
which are torn?
Total shirts= 10
Torn Shirts= 4
Not torn shirts = 6
x=0,1,2,3

X P (X)

0 (40)(63) 𝟐𝟎
⁄ 10 =(1)(20)/120= 𝟏𝟐𝟎
(3)

1 (41)(62) 𝟔𝟎
⁄ 10 =(4)(15)/120=
(3) 𝟏𝟐𝟎

2 (42)(61) 𝟑𝟔
⁄ 10 =(6)(6)/120= 𝟏𝟐𝟎
(3)

3 (43)(60) 𝟒
⁄ 10 =(4)(1)/120= 𝟏𝟐𝟎
(3)
Continuous Variable: A continuous variable is a variable which can take each and every value
with a given interval as it is measurable.
Example: Temperature, height, etc.

Probability Density Function Of Continuous Random Variable: This function is defined as

the first derivative of distribution function with respect to x. It is given as:
𝐝
= (𝐅(𝐱)) = 𝐟(𝐱)
𝐝𝐱
It is also said to be p.d.f.
Rules Of Integration:
There are some rules of integration defined as:

∫ = 𝐓his is the symbol of integration

𝒙𝟐
1. ∫ 𝟏 = x 2. ∫ 𝒙 = 𝟐

𝒙𝟑 𝒙𝟒
𝟑. ∫ 𝒙𝟐 = 4. ∫ 𝒙𝟑 =
𝟑 𝟒

Example: If f(x) = 3x with the limit specified 0 < x < 1, then find:

i. P (x = 1/3)

ii. P(x ≤ 1/3)

iii. P (1/3 < x <1/2)
i. P (x = 1/3) = 0
As we know, in continuous probability distribution, the probability of any specific value is x is
zero.

ii. P(x ≤ 1/3 )

1⁄
= ∫0 3 3x dx
1⁄
= 3 ∫0 3𝑥 𝑑𝑥

= 3/2 [(x2/2)]1/3
= 3/2 [[x2]1/3]
= 3/2 (1/3)2 – (0)2
=3/2 (1/9)
P(x ≤ ½) = 1/6

iii. P (1/3 < x <1/2)

1⁄
3 ∫1⁄ 2 𝑥 𝑑𝑥
3

3 1⁄
= 2 (𝑥 2 )1⁄2
3

3 1⁄
= 2 (𝑥 2 )1⁄2
3

2 2
= (1⁄2) − (1⁄3)
1 1
= −
4 9

9−4
= 36

P (1/3 < x <1/2) = 𝟓⁄𝟑𝟔

Mean and Variance Of Discrete Random Variable:

Mean: In probability, mean is defined as:

Mean = E (X) = Ʃ XP (X)

For Variance, this formula can be used.

Variance (X) = Ʃ𝐗 𝟐 𝐏(𝐗) − [𝐄 (𝐗)]𝟐

Standard deviation can be calculated as:

S.D (X) = √𝒗𝒂𝒓 (𝒙)

Example: In a factory, 10 shirts are made on daily basis. 5 shirts are found to be torn.
Customer checks 3 shirts for purchasing. What is the probability distribution of shirts
which are torn and Find the mean, variance and standard deviation of the data?
Total shirts= 10
Torn Shirts= 5
Not torn shirts = 5
x=0,1,2,3
 X P (X) XP(X) X2P(X)

0 (50)(53) 10 0 0
⁄ 10 =(1)(10)/120= 120
(3)

1 (51)(52) 50 50/120 50/120

⁄ 10 =(5)(10)/120=
(3) 120

2 (52)(51) 50 100/120 200/120

⁄ 10 =(10)(5)/120= 120
(3)

3 (53)(50) 10 30/120 90/120

⁄ 10 =(10)(1)/120= 120
(3)

Total 180/120 =1.5 340/120 = 2.83

Mean = E (X) = Ʃ XP (X)

Mean = E(X) = 1.5

Variance (X) = ƩX^2 P(X)- [E (X)] ^2
= 2.83 – [(1.5)2]
= 2.83 – 2.25

= 0.58

Standard Deviation = S.D (X) = √𝑣𝑎𝑟 (𝑥)

= √0.58
= 0.7615

Mean and Variance of Continuous random variable:

Mean = E (X) = ∫ 𝐱 𝐟(𝐱)

Variance (X) = ∫ 𝐱 𝟐 𝐟(𝐱) − [𝐄 (𝐗)]𝟐

Question: For the function f(x) = 3x and the limit is 0 ≤ 𝒙 ≤ 1. Find mean and variance.

E (X) = Mean = ∫ 𝑥 𝑓(𝑥) 𝑑𝑥

1
= ∫0 𝑥 3𝑥 𝑑𝑥
1
= 3 ∫0 𝑥 2 𝑑𝑥
 3
= 3 [𝑥 3 ]10

= (13 − 03 )

E (X) = 1
1
E (X2) = ∫0 𝑥 2 ∙ 3𝑥 𝑑𝑥
1
= 3 ∫0 𝑥 3 𝑑𝑥
3
= 4 (𝑥 4 )10

= ¾ (14 – 04)

E (X2) = ¾ = 0.75

Variance (X) = ∫ 𝑥 2 𝑓(𝑥) − [𝐸 (𝑋)]2

Var (X) = 0.75 − (1)2

Var (X) = -0.25