Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

Probability and Probability Distribution

Objectives
In this unit we will be looking at:
1. What is probability
2. Experiment, outcome and sample space
3. Calculating probability
4. Calculating marginal and conditional probability
5. Independent versus Dependent events
6. Intersection of Events and the multiplication rule
7. Union of events and the addition rule
8. Mutually exclusive events
9. Complementary events

1. What is Probability?
This is the science of measuring uncertainties. It measures the likelihood of a specific event
occurring. It is a numerical value 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 head when I flip a fair coin?
 The closer a probability is to zero the more improbable it is that the event
will occur.
 The closer the probability is to one, the more sure we are that the event
will occur

2. Experiment, outcome and sample space

 Experiment: This is a process that leads to the occurrence of one of several possible
observations. In probability an experiment has two or more results and it is uncertain
which will occur.
 Outcome: A particular result of an experiment.
 Sample Space (denoted by S or U): This is the set of ALL possible outcomes.
 Event: This is a collection of one or more outcomes of an experiment

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Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

o Simple Event- An event that includes one and only one outcome for an
experiment.
o Compound Event- is a collection of more than one outcomes for an
experiment

Some Illustrations
 Rolling a die (EXPERIMENT).
 Getting a 1, 2,3,4,5 or a 6 after the die is rolled (OUTCOME).
 The set of all the outcomes from rolling a fair die: S = {1, 2, 3, 4, 5, and 6} (SAMPLE
SPACE)
 Tossing 2 coins and the possibility of getting a head or a tail (SIMPLE EVENT)
 In tossing a coin, the event of getting at most one head (COMPOUND EVENT)

Example 1: A box contains a certain number of computer parts, a few of which are defective.
Two parts are selected at random from this box and inspected to determine if they are good or
defective. How many total outcomes are possible? Draw a tree diagram for this experiment.

Example 2: If a fair coin is tossed three times, what is the event that tail comes up at most three
times?

3. Calculating Probability

LAWS of Probability: when calculating probabilities, you must remember two fundamental laws
of probability. These are:
 If A is an event, then 0 ≤ P(A) ≤ 1
Probabilities are ALWAYS positive and ALWAYS less than or equal to 1

 The sum of the probabilities of all simple events (or final outcomes) for an experiment is
always 1. i.e. P(S) = 1

Approaches to Probability

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Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

Classical Probability: This is based on the assumption that the outcomes of an experiment are
equally likely.

The probability of an event happening is computed by dividing the number of favourable

outcomes by the number of possible outcomes

Classical Probability Example:

What is the probability of the event “an even number of spots appearing face up” after rolling a
fair die? (Hint: 3 even numbers divided by 6 possible outcomes = 0.5)

Relative Frequency Concept of Probability

If an experiment is repeated n times and an event A is observed f times, then according to the
relative frequency concept of probability:

Relative frequency Approach to Probability Example: There are 1265 eligible voters in a town
and 972 of them are registered to vote. If one eligible voter is selected at random, what is the
probability that this voter is:
Registered = 0.768
Not registered = 0.232

Subjective Concept of Probability

The probability assigned to an event based on subjective judgements, experience and beliefs.
Assigned arbitrarily and is usually influenced by the biases, preferences and experiences of the
person assigning the probability

Subjective Probability Example: The probability that the Reggae Boys will win the next World
Cup. The Probability that Carl, who is taking ECON1005, will earn an A in this course

REVISION OF SET THEORY

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Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

 A set is a collection of elements or objects of interest

 Empty set (denoted by ) a set containing no elements

 Universal Set (denoted by U or S): a set containing all possible elements
 Subset Set (denoted by  or ): a set containing elements of another set
 Complement (Not). The complement of A is a set containing all elements not in A.
This is denoted by Ac or A’ or A

TYPES OF PROBABILITIES
4. Marginal and Conditional Probabilities
a. Marginal Probability- This is the probability of a single event without consideration
of any other event. These probabilities are called marginal probabilities because they
are calculated by dividing the corresponding margins by the grand total.

Marginal Probability Example: 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

Gender Have Shopped Have Never Shopped

Male 500 700

Female 300 500

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
(Hint: the answers are (500+700)/2000, (300+500)/2000, (700+500)/2000 and (500+300)/2000
for a, b, c and d respectively. Note that the denominator (aka the grand total i.e. 2000) is
common in all cases.)

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Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

b. Conditional Probability- This is the probability that an event will occur given that
another event has already occurred. If A and B are two events, then the conditional
probability of A given B is written as P(A|B).

Conditional Probability Example 1: What is the probability that an individual has shopped on
the internet given that this adult is a female?

(Hint: )

Conditional Probability Example 2: What is the probability that this adult is male given that this
adult never shopped on the internet?

(Hint: )

5. Independent versus Dependent Events

a. Independent Events - two events are independent if the occurrence of one does not affect
the probability of the occurrence of the other.

Note: A and B are independent events if

 or

Otherwise, A and B are dependent.

Independent versus Dependent Example: Using the Online shopping example above, are the
events “female” and “have shopped” independent? Why or why not?
(Hint: and ).
Since , then both events are not independent.)

RULES OF PROBABILITY
6. Intersection of Events and the multiplication rule
General Rules of Multiplication

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Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

The rules of multiplication are used to find the joint probability of that two events will occur.
Within the context of set theorem, Joint Probability is the probability of intersection of two
events i.e. .

Note the following:

 “AND” in probability means “Intersection” i.e.
 Generally,
or

Note however that if events A and B are independent, then . Therefore, if the
two events are independent, then

This is called the Special Rule of Multiplication.

Special Rule of Multiplication Example: Two coins are tossed. What is the probability that both
will land tail up? What is the probability that both will land head up? (Hint: Ans. = 0.25)

a. General Rule of Multiplication and Conditional Probabilities

Since , then by transposing and solving for P(B|A) we get

Similarly, since , then by solving for P(A|B) we get

Notice that the event that comes after the “given that” symbol (|) will always be in the
denominator when solving for either P(A|B) or P(B|A).

General Rule of Multiplication Example: There are 10 rolls of film in a box, 3 of which are
defective. Two rolls are to be selected one after the other.
a. What is the probability of selecting a defective roll followed by another defective roll?

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 Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

[Hint: P(a defective roll ∩ another defective roll) = P(defective roll) × P(another defective roll│a
defective roll) i.e. ]

b. What is the probability of selecting a defective roll followed by a good roll?

[Hint: P(a defective roll ∩ a good roll) = P(defective roll)×P(a good roll │a defective roll) i.e.
]

7. Union of events and the addition rule

General Rules of Addition
The rules of addition are used to find the probability that either even A, or B or both A and B
will occur. Within the context of set theorem, the addition rule refers to the Union of two events
i.e. P(A or B).

Note the following:

 “OR” in probability means “Union” i.e.
 Generally,
i.e.

General Rule of Addition Example: What is the probability a random chosen card from a
standard deck of cards will be a king or a heart?

Card Probability Explanation

King P(A)=4/52 4 kings in a deck of 52

Heart P(B)=13/52 13 hearts in a deck of 52

King of hearts P(A and B)=1/52 1 king of hearts in a deck of 52

8. Mutually Exclusive Events

Mutually exclusive events are those that cannot occur together. If two events, A and B are
mutually exclusive then the following are true:
 They cannot occur at the same time
 Both events A and B have no elements in common

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Prepared by Richard Sutherland ECON1005: Introductory Statistics Semester 1, 2012-13

 And most importantly, they have no intersection,

Examples:
 Passing a course and failing at the same time
 Getting pregnant and giving birth

Special Rule of Addition

If two events are mutually exclusive, the special rule of addition states that the probability of one
or the other event occurring equals the sum of their probabilities. That is,

Special rule of addition Example: A machine fills plastic bags with a mixture of beans and
broccolis. Most of the bags contain the correct weight but because of the slight variation in the
size of the beans a package may be slightly underweight or over weight. A check of 4,000
packages in the past month revealed:

a. What is the probability that a particular package will be underweight or overweight?

b. What is the probability that a particular package may be underweight or satisfactory?

9. The Complement Rule

The complement rule is used to determine the probability of an event occurring by
subtracting the probability of an event not occurring from 1. Hence, if events A and B are
complements then

and

Complement Rule Example: Given the example above of packaging of mixed vegetable, use the
complement rule to show the probability of a satisfactory bag is 0.900