Lesson 13: Laws & Application of Probability

13.1: Laws of Probability

Addition Law of Probability
For disjoint events A and B-
The probability that, either event A or event B will occur is,
𝑃(𝐴∪𝐵) = 𝑃(𝐴) + 𝑃(𝐵)

For disjoint events A, B, C, … , and Z-

The probability that, either event A or event B or event C or … or event Z will occur is,
𝑃(𝐴∪𝐵∪𝐶∪…∪𝑍) = 𝑃(𝐴) + 𝑃(𝐵) + 𝑃(𝐶) + …+ 𝑃(𝑍)

Example:​ The probabilities of Rafid purchasing stocks of Beximco, ACI and BRAC Bank are
1⁄3, 1⁄5 and 1⁄9 respectively. Determine the probability that:
1. He purchases stocks of either Beximco or BRAC Bank
Sol:​ P(Beximco ⋃ BRAC Bank) = P(Beximco) + P(BRAC Bank) = 1⁄3 + 1⁄9 = 4/9 =
0.44

2. He purchases stocks of either of the three companies

Sol:​ P(Beximco ⋃ ACI ⋃ BRAC Bank) = P(Beximco) + P(ACI) + P(BRAC Bank)
= 1⁄3 + 1⁄5 + 1⁄9 = 29/45 = 0.64

3. He does not purchases stocks of any of the three companies

Sol:​ P((Beximco ⋃ ACI ⋃ BRAC Bank)​c​) = 1 - P(Beximco ⋃ ACI ⋃ BRAC Bank)
= 1 - 29/45 = 16/45 = 0.36

For joint events A and B-

The probability that, either event A or event B or both will occur is,
𝑃(𝐴∪𝐵) = 𝑃(𝐴) + 𝑃(𝐵) − 𝑃(𝐴∩𝐵)

STA101 (Introduction to Statistics) _Lesson Note 13_Summer 2022

For joint events A, B, and C
The probability that, either event A or event B or event C or any two of them or all will occur
is,
𝑃(𝐴∪𝐵∪𝐶) = 𝑃(𝐴) + 𝑃(𝐵) + 𝑃(𝐶) − 𝑃(𝐴∩𝐵) − 𝑃(𝐵∩𝐶) − 𝑃(𝐴∩𝐶) + 𝑃(𝐴∩𝐵∩𝐶)

Example: ​In a company, 60% of the employees have motorcycles (M), 40% have private
cars (C) and 20% have both.
If an employee is selected randomly from that company, then:
1. What is the probability that the employee has either a motorcycle or private car?
P(M⋃C) = P(M) + P(C) - P(M⋂C) = 0.6 + 0.4 - 0.2 = 0.8

2. What is the probability that the employee has neither a motorcycle nor private car?
P((M⋃C)​c​) = 1 - P(M⋃C) = 1 - 0.8 = 0.2

Conditional Probability
The conditional probability of an event A, given that another event B has already happened
is,
𝑃(𝐴|𝐵) = 𝑃(𝐴∩𝐵) / 𝑃(𝐵) 𝑓𝑜𝑟 𝑃(𝐵)>0

Example: ​In a company, 60% of the employees have motorcycles (M), 40% have private
cars (C) and 20% have both.
If an employee is selected randomly from that company, then:
1. What is the probability that the employee has a car?
P(C) = 0.4

2. If it is known that the employee has a motorcycle, then what is the probability that the
employee also has a car?
P(C|M) = P(M⋂C) / P(M) = 0.2/0.6 = ⅓ = 0.33

Multiplication Law of Probability

For two independent events A and B-
The probability that, both event A and event B will occur simultaneously is,
𝑃(𝐴∩𝐵) = 𝑃(𝐴) x 𝑃(𝐵)

Example:​ Mr. Fahad and Mr. Khan have to tour abroad for their business frequently. Mr.
Fahad tours 65% of the times in a year, and Mr. Khan tours 50% of the times in a year. What
is the probability that, on January 01, 2016, both Mr. Fahad and Mr. Khan will be abroad?

Sol:​ Let, F = Mr. Fahad is on tour, and K = Mr. Khan is on tour

P(F) = 0.65, and P(K) = 0.5
∴ P(F∩K) = P(F) x P(K) = 0.65 x 0.5 = 0.325

STA101 (Introduction to Statistics) _Lesson Note 13_Summer 2022

For two dependent events A and B-
The probability that, both event A and event B will occur simultaneously is,
𝑃(𝐴∩𝐵) = 𝑃(𝐴|𝐵) x 𝑃(𝐵)
Here, occurrence of event A depends on occurrence of event B.

Example:​ During the rainy season, it rains on 70% of the days in Bangladesh. When it rains,
80% of the time it is also accompanied by thunderstorms. What is the probability that, on a
particular day of the rainy season, it will rain and it will thunderstorm?

Sol:​ Let R = Rain, and T = Thunderstorm

P(R) = 0.7
P(T|R) = 0.8
∴ P(R∩T) = P(T|R) x P(R) = 0.8 x 0.7 = 0.56

STA101 (Introduction to Statistics) _Lesson Note 13_Summer 2022

13.2: Sampling With and Without Replacement
Sampling with replacement:
If the elements of a sample are drawn randomly one by one and after each draw the element
is returned to the population then the drawing is said to be done with replacement and the
process of having the sample is called random sampling with replacement.

Sampling without replacement:

If the elements of a sample are drawn randomly one by one and after each draw the element
is not returned to the population then the drawing is said to be done without replacement and
the process of having the sample is called random sampling without replacement.

Example:​ A box contains seven balls – two red (R), three blue (B) and two yellow (Y).
Consider an experiment that consists of drawing a ball from the box.

1. What is the probability that the first ball drawn is yellow?

Sol:​ P(Y) = 2/7

2. What is the probability that the same colored ball is drawn twice with replacement?
Sol: ​P(Same colour drawn twice) = P(R∩R) + P(B∩B) + P(Y∩Y)
= (2/7 x 2/7) + (3/7 x 3/7) + (2/7 x 2/7)
= 17/49 = 0.35

3. What is the probability that the same colored ball is drawn twice without
replacement?
Sol:​ P(Same colour drawn twice) = P(R∩R) + P(B∩B) + P(Y∩Y)
= (2/7 x 1/6) + (3/7 x 2/6) + (2/7 x 1/6)
= 5/21 = 0.24

Exercise: ​(Try it yourself)

A jar consists of 21 sweets. 12 are green and 9 are blue. William picked two sweets at
random.
1. Draw a tree diagram to represent the experiment.
2. Find the probability that
a. both sweets are blue.
b. One sweet is blue and one sweet is green.
3. William randomly took a third sweet. Find the probability that:
a. All three sweets are green?
b. At least one of the sweets is blue?

STA101 (Introduction to Statistics) _Lesson Note 13_Summer 2022

13.3: Probability Using Contingency Tables
Below given a contingency table for Smoking status and Cancer status.

Cancer Healthy Total

Smoker 7860 1530 9390

Non-smoker 5390 11580 16970

Total 13250 13110 26360

1. What is the probability that a randomly selected person is a smoker

Sol:​ 𝑃(𝑆) = 9390/26360 = 0.356

2. What is the probability that a randomly selected person has cancer?

Sol:​ 𝑃(𝐶) = 13250/26360 = 0.503

3. What is the probability that a randomly selected person is both smoker and has
cancer?
Sol:​ 𝑃(𝑆∩𝐶) = 7860/26360 = 0.298
or: ​𝑃(𝑆∩𝐶) = 𝑃(𝐶│𝑆) x 𝑃(𝑆) = (7860/9390) × (9390/26360) = 0.298

4. If a person is a smoker, what is the probability that he also has cancer?

Sol:​ 𝑃(𝐶│𝑆) = 7860/9390 = 0.837
or:​ 𝑃(𝐶│𝑆) = 𝑃(𝑆∩𝐶)/𝑃(𝑆) = (7860/26360) / (9390/26360) = 0.837

Practice Problems
Statistical Techniques in Business and Economics (Lind & Marchal)
Page 146: 11, 15, 17, 19, 21
Page 155: 23, 25, 27, 29, 31

Statistics for Business and Economics (Anderson, Sweeney & Williams)

Page 162: 22, 23, 24, 26, 28
Page 168: 30, 32(c-g), 34, 36, 38

STA101 (Introduction to Statistics) _Lesson Note 13_Summer 2022