Professional Documents
Culture Documents
BUSINESS
STATISTICS
by
AMIR D. ACZEL
&
JAYAVEL SOUNDERPANDIAN
7th edition.
Chapter 2
Probability
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
2-2
2 Probability
Using Statistics
Basic Definitions: Events, Sample Space, and Probabilities
Basic Rules for Probability
Conditional Probability
Independence of Events
Combinatorial Concepts
The Law of Total Probability and Bayes’ Theorem
The Joint Probability Table
Using the Computer
2-3
2 LEARNING OBJECTIVES
Types of Probability
Objective or Classical Probability
based on equally-likely events
based on long-run relative frequency of events
not based on personal beliefs
is the same for all observers (objective)
examples: toss a coin, roll a die, pick a card
2-6
Subjective Probability
based on personal beliefs, experiences, prejudices, intuition - personal
judgment
different for all observers (subjective)
examples: Super Bowl, elections, new product introduction, snowfall
2-7
A
2-8
Complement of a Set
Venn
VennDiagram
Diagramillustrating
illustratingthe
theComplement
Complementof
ofan
anevent
event
2-9
A
B
A B
2-11
Sets: A Union B
A
B
A B
2-12
A B
2-14
Sets: Partition
S
A3
A1
A2 A4
A5
2-15
Experiment
• Process that leads to one of several possible outcomes *, e.g.:
Coin toss
• Heads, Tails
Rolling a die
• 1, 2, 3, 4, 5, 6
Pick a card
AH, KH, QH, ...
Introduce a new product
• Each trial of an experiment has a single observed outcome.
• The precise outcome of a random experiment is unknown before a trial.
**Also
Alsocalled
calledaabasic
basicoutcome,
outcome,elementary
elementaryevent,
event,ororsimple
simpleevent
event
2-16
Events : Definition
Sample Space or Event Set
Set of all possible outcomes (universal set) for a given experiment
E.g.: Roll a regular six-sided die
S = {1,2,3,4,5,6}
Event
Collection of outcomes having a common characteristic
E.g.: Even number
A = {2,4,6}
Event A occurs if an outcome in the set A occurs
Probability of an event
Sum of the probabilities of the outcomes of which it consists
P(A) = P(2) + P(4) + P(6)
2-17
Equally-likely Probabilities
(Hypothetical or Ideal Experiments)
• For example:
Roll a die
• Six possible outcomes {1,2,3,4,5,6}
• If each is equally-likely, the probability of each is 1/6 = 0.1667 =
16.67%
1
P ( e)
n( S )
• Probability of each equally-likely outcome is 1 divided by the number
of possible outcomes
Event A (even number)
• P(A) = P(2) + P(4) + P(6) = 1/6 + 1/6 + 1/6 = 1/2
• for e in A
P ( A ) P ( e)
n( A ) 3 1
n( S ) 6 2
2-18
Rangeof
Range ofValues
Valuesfor
forP(A):
P(A):
0 P( A) 1
Complements--Probability
Complements Probabilityof
ofnot
notAA
P( A ) 1 P( A)
Intersection--Probability
Intersection Probabilityof
ofboth
bothAAand
andBB
P( A B) n( A B)
n( S )
Mutuallyexclusive
Mutually exclusiveevents
events(A
(Aand
andC)
C): :
P( A C) 0
2-20
P( A B) n( A B) P( A) P( B) P( A B)
n( S )
Mutuallyexclusive
Mutually exclusiveevents:
events:IfIfAAand
andBBare
aremutually
mutuallyexclusive,
exclusive,then
then
P( A B) 0 so P( A B) P( A) P( B)
2-21
A
B
P( A B)
2-22
•• ConditionalProbability
Conditional Probability--Probability
ProbabilityofofAAgiven
givenBB
P( A B)
P ( A B) , where P( B) 0
P ( B)
Independentevents:
Independent events:
P( A B) P( A)
P( B A) P( B)
2-23
Rulesof
Rules ofconditional
conditionalprobability:
probability:
P( A B) P( A B) so P( A B) P( A B) P( B)
P( B)
P( B A) P( A)
P ( A D ) P ( A)
so P( A D) P( A)P(D)
P ( D A) P ( D )
2-24
Counts
AT& T IBM Total
4 13 1
P ( Ace Heart ) * P( Ace) P ( Heart )
52 52 52
2-26
Independence of Events –
Example 2-5
Example 2-7:
P(Q Q Q Q ) 1 P(Q )P(Q )P(Q )P(Q )
1 2 3 10 1 2 3 10
1 0.9010 1 0.3487 0.6513
2-28
.
Order the letters: A, B, and C
C
.
. .. ..
ABC
B
C B
. . . A ACB
..
A C BAC
B
. .
C A
C BCA
. .
A B
B CAB
A
CBA
2-30
Factorial
Bayes’ Theorem
• Bayes’ theorem enables you, knowing just a little more than the
probability of A given B, to find the probability of B given A.
• Based on the definition of conditional probability and the law of total
probability.
P ( A B)
P ( B A)
P ( A)
P ( A B) Applying the law of total
probability to the denominator
P ( A B) P ( A B )
P ( A B) P ( B) Applying the definition of
P ( A B ) P ( B) P ( A B ) P ( B ) conditional probability throughout
2-37
P( I ) 0.001 P( I Z )
P ( I Z )
P( Z )
P ( I Z )
P ( I Z ) P ( I Z )
P( I ) 0.999
P( Z I ) P( I )
P( Z I ) P( I ) P( Z I ) P( I )
P( Z I ) 0.92
(.92)( 0.001)
(.92)( 0.001) ( 0.04)(.999)
0.00092 0.00092
0.00092 0.03996 .04088
P( Z I ) 0.04 .0225
2-39
P( Z I ) 0.96
P ( Z I ) (0.999)(0.96) .95904
2-40
P( A B )
P ( B A) 1
P ( A)
1
P( A B ) i
Applying the definition of
P( A B ) P( B ) conditional probability throughout
1 1
P( A B ) P( B )
i i
2-41
P ( H A)
P ( H A)
P( A)
P ( H A)
P( H A) P ( M A) P ( L A)
P( A H ) P( H )
P ( A H ) P ( H ) P ( A M ) P ( M ) P ( A L) P ( L )
( 0.70)( 0.30)
( 0.70)( 0.30) ( 0.40)( 0.50) ( 0.20)( 0.20)
0.21 0.21
0.21 0.20 0.04 0.45
0.467
2-43
P ( A H ) 0.30
P ( H ) 0.30 P ( A H ) ( 0.30)( 0.30) 0.09
P ( M ) 0.50
Ajoint
A jointprobability
probabilitytable
tableisissimilar
similartotoaacontingency
contingencytable
table, ,except
exceptthat
thatitit
hasprobabilities
has probabilitiesininplace
placeof
offrequencies.
frequencies.
Thejoint
The jointprobability
probabilityforforExample
Example2-112-11isisshown
shownon
onthe
thenext
nextslide.
slide.
Therow
The rowtotals
totalsand
andcolumn
columntotals
totalsare
arecalled
calledmarginal
marginalprobabilities.
probabilities.
2-46
$ Appreciates
0.21 0.2 0.04 0.45
$Depreciates
0.09 0.3 0.16 0.55
Marginal probabilities are the row totals and the column totals.
2-47
Continuationof
Continuation ofoutput
outputfrom
fromprevious
previousslide.
slide.