TERM 2 STATISTICS AND PROBABILITY REVIEWER

Random Variables and Probability Distributions

• Random Variables
- Function that associates a numerical value with every outcomes of an experiment
Domain – sample space
Range – some set of real numbers
- Discrete if its set of possible outcomes is countable
- Continuous if it takes on values on a continuous scale (usually measured data)
Example:
Discrete
▪ Number of defective computers
▪ Number of siblings in a family in a region
▪ Number of female students
▪ Time needed to finish the test
Continuous
▪ Weight of newborns each year
▪ Speed of a car
▪ Amount of paint utilized in a project
# 𝑜𝑓 𝑠𝑢𝑐𝑐𝑒𝑠𝑠
• 𝑃(𝐸𝑣𝑒𝑛𝑡) =
𝑡𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑜𝑢𝑡𝑐𝑜𝑚𝑒𝑠
• A discrete probability distribution or a probability mass function consists of the values of a random
variable can assume and the corresponding probabilities of the values/
Properties of a Probability Distribution
• The probability of each value of the random variable must be between or equal to zero and one. —
𝑜 ≤ 𝑃(𝑋) ≤ 1
• The sum of the probabilities of all value of the random variable must be one. — Σ𝑃(𝑋) = 1
Computing the Mean and the Variance of a Discrete Probability Distribution
• The mean of a random variable with a discrete probability distribution is 𝜇 = Σ 𝑋 ⋅ P(X)
- Where 𝑋1 , 𝑋2 , 𝑋3 … are the values of the random variable and 𝑃(𝑋1 ), 𝑃(𝑋2 ), 𝑃(𝑋3 ) … are
the corresponding probabilities.
• Variance = 𝜎 2 = Σ 𝑋2 ⋅ 𝑃(𝑋) − 𝜇 2
• Standard Deviation = square root of variance
Expected Value
• Applies the expectation or expected value in various types of games of chance in decision theory.
• 𝜇 = Σ 𝑊 ⋅ 𝑃(𝑊) − 𝑏𝑒𝑡
Example:
 One thousand tickets are sold at php 100 each for a smart television valued at php 35,000. What is the
expected value if you purchase one ticket?
𝜇 = Σ 𝑊 ⋅ 𝑃(𝑊) − 𝑏𝑒𝑡
= 35000*1/1000 – 100
= -65
• FYI – if the expected value is zero, the game is said to be fair.
• Expected value is positive, then the game is on favor of the player
• Expected value is negative, then the game is on the favor of the house
• Expected value is zero, the game is said to be fair.
Normal Distribution
• Continuous random variable is normally distributed or has a normal probability distribution if its
relative frequency histogram of the random variable has the shape of normal curve.
• Not normal curve = skewed to the left/right
Properties of the Normal Curve

- Symmetric about its mean

- Because mean=median=mode, the highest point occurs at 𝑋 = 𝜇
- The are under the curve is 1 (Left = 0.5 & right = 0.5)
- As x increases/decrease, the graph approaches x-axis
- It follows the Empirical rule
Standardizing a Normal Random Variable
𝑋−𝜇
• 𝑍= 𝜎
- Where X = given score
- 𝜇 = population mean
- 𝜎 = population standard deviation
Z-score
• Represents the distance that a data value is from the mean in terms of the number of standard
deviation
• Unitless. It has a mean of zero and standard deviation 1/
𝑋−𝜇
• Population z-score: 𝑍 = 𝜎
𝑋−𝑋̅
• Sample z-score: 𝑍 = 𝑠

Standard Normal Curve

Distribution of the Sample Mean
• Sampling distribution
- Probability distribution for all possible values of the statistic computed from the sample of size
n.
• Sampling distribution of the sample mean
- Probability distribution of all possible values of the random variable x computed from the
sample size n from the population mean and standard deviation
If a random variable X is normally distributed, the distribution of the sample mean is normally distributed.

Standard error of the mean

Formula
 • Central Limit Theorem
- Shape of the distribution of the sample mean becomes approximately normal as the sample
size n increases, regardless of the shape of the population.

Estimating Parameters with Known Population Standard Deviation

• Point estimate
- Value of a statistic that estimates the value of a parameter.
- The best point estimate is the sample mean.
• Level of Confidence
- Expected proportion of intervals that will contain the parameter if a large number of different
samples is obtained.
Estimating A Population Mean
Unknown Population Standard Deviation
Hypothesis Testing