IBA-JU WMBA Program Course Instructor: Dr Swapan Kumar Dhar Probability Probability, chance and likelihood are used

interchangeably. In general, probability is the chance that something will happen. The probability of an event is measured by values between 0 and 1. The probability of a certainty is 1. The probability of an impossibility is 0. That can be shown in the following diagram. Cannot happen 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 Sure to happen 0.90 1.00 5

Probability of our sun will disappear this year

Chance that Egypt will be the next World Cup Football champion

Chance of a head in single toss of a coin

Chance of an increase in gas charge

Chance of rain in this year

Experiment: The observation of some activity or the act of taking some measurement. Outcome: A particular result of an experiment. Event: A collection of one or more outcomes of an experiment. Example 1: (i) Experiment: Roll a die Possible Outcomes: Observe a 1 Observe a 2 Observe a 3 Observe a 4 Observe a 5 Observe a 6 Possible event: Observe an even number Observe a number greater than 4 Observe a number 3 or less (ii) Experiment: Count the number of inmates at the Prison who are over 45 years of age Possible outcomes: Counted 0 that are 45 years of age . . . Counted 29 those are over 45 years of age . . . Counted 48 those are over 45 years of age . . . Possible events: More than 13 are over 60 years Fewer than 20 are over 60 years . . . In the first case there are six possible outcomes, but there are many possible events. For the second experiment, the number of possible outcomes can be anywhere from zero to the total number of inmates. So, there are a large number of possible events in this experiment. Sample Space:

The sample space is the set of all possible outcomes of the experiment. We usually call it S. It is important to be able to list the outcomes clearly. For example, if I plant ten bean seeds and count the number that germinate, the sample space is S = {0,1,2,3,4,5,6,7,8,9,10}. If I toss a coin three times and record the result, the sample space is S = {HHH,HHT,HTH,HTT,THH,THT,TTH,TTT}, where (for example) HTH means heads on the first toss, then tails, then heads again. An event is a subset of S. We can specify an event by listing all the outcomes that make it up. In the above example, let A be the event more heads than tails and B the event heads on last throw. Then A = {HHH,HHT,HTH,THH}, B = {HHH,HTH,THH,TTH}. Mutually exclusive: The occurrence of any one event means that none of the others can occur at the same time. Example 2: In the die-tossing experiment the six possible outcomes are mutually exclusive events. An experiment has a set of events that includes every possible outcome. Such as the die-tossing experiment, the set of events is called collectively exhaustive. Collectively exhaustive: At least one of the events must occur when an experiment is conducted. Example 3: For the die-tossing experiment, the set of events consists of 1, 2, 3, 4, 5 and 6. The set is collectively exhaustive because it includes all possible outcomes. Approaches to Assigning Probabilities: There are two approaches of finding probabilities, (1) Objective and (2) Subjective. Again objective probability is divided into (i) Classical probability and (ii) Empirical probability. Classical Probability: This probability is based on the assumption that the outcomes of an experiment are equally likely. So Number of favorable outcomes Probability of an event = P (an event) = . Total number of possible outcomes Example 4: The experiment is to observe the up face on a six-sided die. What is the probability that a 2 will appear face up? Solution: 1 Number of favourable outcomes = 0.167 . Probability of a two spot = = 6 Total Number of possible outcomes If only one of several events can occur at one time, we refer to the events as being mutually exclusive. Empirical Probability: It is based on relative frequencies. The probability of an event happening is determined by observing what fraction of the time similar events happened in the past. Number of times event occurred in the past P (an event) = . Total number of observations Example 5: Assume that during the last calendar year there were 500 births at a local hospital. 320 of them were baby girls. Find the probability that the next birth (or any randomly selected birth) is a girl is Number of girl born last year 320 P(Girl) = = . Total Number of girl births 500 Example 6: An importer receives shipments of boxes each containing three items. The data for the past 100 boxes indicating the number of items in each box that were damaged are reported in the table. The probabilities are given in the table. Number of boxes P ( Ei ) Outcome ( Ei ) (Number of defects) 0 40 40/100 = 0.40 1 27 27/100 = 0.27 2 21 21/100 = 0.21 3 12 12/100 = 0.12 100 1.00 21 For example P ( two items in any given box is damaged) = P(2) = = 0.21. 100

Example 7: The accompanying table shows the number of computers sold daily by a retail store. Number of computer sold 0 1 2 3 4 Number of days 12 43 18 20 25

Determine the probability that the number sold today is: (a) 2 (b) less than 3 (c) more than 1 (d) at least 1. Solution: Number of days P ( Ei ) Number of computers sold ( Ei ) 0 12 12/118 1 43 43/118 2 18 18/118 3 20 20/118 4 25 25/118 118 1.00 18 = 0.152 (a) P(2) = 118

(b) P(E < 3) = P(2) + P(1) + P(0) = (c) P(E > 1) = P(2) + P(3) + P(4) = (d) P(E 1) = 1
12 = 106

18 118 18 118

+ +

43 118 20 118

+ +

12 118 25 118

= 0.619 = 63 118 = 0.534

= 0.898 118 118 Subjective Probability: The probability of a particular event happening that is assigned by an individual based on whatever information is available. Illustrations: 1. Estimating the probability that there will be rain tomorrow. 2. Estimating the probability that you will earn grade A in this course.

Approaches to Probability

Objective

Subjective

Classic Probability

Empirical Probability

Based on available Information

Based on Equally Likely Outcomes

Based on Relative Frequencies

Unions, Intersections and the Relationship between Events A set is any collection of objects. Suppose set A consists of all the students in your statistics class and set B consists of all students at your university who are majoring in economics. We can see this by the following Venn diagram.

A = All students in your class. B = All economics majors. A B = A intersection B = common to both A and B that is economics majors in your class. Intersection of A and B : The set of all elements those are in both A and B denoted by A B. The union of A and B , written A B and read as A union B consists of those elements that are in either A or B or both. For example, all students who are in your class (set A) , and all economics majors (set B) regardless of whether they are in your class are elements in A B. The Union of A and B : The set of all elements that are in A or B. Some Basic Rules of Probability: Rules of Addition: Special Rule of Addition: If two events A and B are mutually exclusive, the special rule of addition states that the probability of one or the other events occurring equals the sum of their probabilities. That is, P(A or B) = P(A) + P(B) P(A B) = P(A) + P(B) Example 8: A machine fills plastic bags with a mixture of beans, broccoli and other vegetables. Most of the bags contain the correct weight, but because of the slight variation in the size of the beans and other vegetables, a package might be slightly underweight or overweight. A check of 4,000 packages in the past revealed: Number of packages Probability of occurrence 100 100/4000 = 0.025 3600 0.900 300 0.075 4000 1.000 What is the probability that a particular package will be either underweight or overweight? Solution: Here the events are mutually exclusive, meaning that a package of mixed vegetables cannot be underweight, satisfactory and overweight at the same time. The outcome `underweight is the event A. The outcome `overweight is the event C. Applying the special rule of addition: P(A or C) = P(A C) = P(A) + P(C) = 0.025 + 0.075 = 0.10 The General Rule of Addition Example 9: Suppose Bangladesh Parjaton Corporation selected a sample of 200 tourists who visited the country during the year. The survey revealed that 120 tourists went to Sundarban and 100 went to Paharpur. Here it is known that 60 out of 200 visited both attractive. What is the probability that a person selected visited either Sundarban or Paharpur? Solution: If the special rule of addition is used, the probability of selecting a tourists who went to Sundarban is 120 100 = 0.60. Similarly, the probability of a tourist going to Paharpur is = 0.50. So, the sum of these 200 200 probabilities is 0.60+0.50 = 1.10 which is absent as total probability cannot be greater than 1. So, the explanation is that many tourists visited both attractions and are being counted twice. So, the required probability is P ( Sundarban or Paharpur) = P ( Sundarban) + P ( Paharpur) - P ( both Sundarban and Paharpur) = 0.80 . 200 200 200 200 So, this is the general rule of addition. When two events overlap, the probability is called a joint probability. The probability that a tourist visits both attractions (0.30) is an example of a joint probability. If A and B are not two mutually exclusive events, the general rule of addition is P(A or B) = P(A B) = P(A) + P(B) P(A and B) = P(A) + P(B) P(A B) . Example 10: What is the probability that a card chosen at random from a standard deck of cards will either be a King or a Heart? Solution: Card Probability Explanation = 120 + 100 60 = 160 Weight Underweight Satisfactory Overweight Event A B C

King Heart King of Hearts

P(A) = P(B) =

4 52 13 52 1 52 4 52 + 13 52 1 52

4 Kings in a deck of 52 cards 13 Hearts in a deck of 52 cards 1 King of Hearts in a deck of 52 cards

P(A and B) = P(A B) =

Using the general rule of addition, P(A or B) = P(A B) = P(A) + P(B) P(A B) = = 16 52 = 0.3077 .

Rules of Multiplication Special rule of multiplication: Here two events A and B are independent. Two events are independent if the occurrence of one does not alter the probability of the other For two independent events A and B , the probability that A and B will both occur is found by multiplying the to probabilities. This is called the special rule of multiplication. Symbolically it is P(A and B) = P(A).P(B) P(A B) = P(A).P(B) For three events A, B, C it is P(A B C) = P(A).P(B).P(C) Example 11: Two coins are tossed. What is the probability that both will land tail up? Solution: Let A be the event of showing tail in one coin and B be the event of showing tail in other coin. Then P(A) = 0.50 and P(B) = 0.50. Here A and B are independent. Then by multiplication rule, 1 1 . = 0.25 . 2 2 Listing all of the possible outcomes can also show this. Two tails is only one of the four possible outcomes: T T T H or H T or H H or If two events are not independent, they are referred to as being dependent. Example 12: Suppose there are 10 rolls of film in a box and it is known that 3 are defective. A roll of film is selected from the box randomly. 3 7 Here P ( Selecting a defective roll) = and P ( Selecting a good roll) = . 10 10 If a second roll is selected from the box without the first one being returned to the box. Now the probability that it is defective depends on whether the first roll selected was defective or good. Hence, 2 P ( Second roll is defective) = if the first roll selected was defective. 9 3 and P ( Second roll is defective) = if the first roll selected was good. 9 2 3 The probability or is called a conditional probability because its value is conditional on (dependent on) 9 9 whether a defective or good roll of film is chosen in the first selection from the box. P(A and B) = P(A).P(B) P(A B) = P(A).P(B) = Probability: The probability of a particular event occurring given that another event has occurred. General Rule of Multiplication This rule states that for two events A and B , the joint probability that both events will happen is found by multiplying the probability that event A will happen by the conditional probability of event B s occurring. Symbolically, the joint probability ( A and B ) is found by P ( A and B ) = P ( A). P ( B / A) P ( A B ) = P ( A). P ( B / A) = P ( B ). P ( A / B ).

Conditional

Where P ( B / A) = P ( B ) will occur given that A has already occurred. Example 13: Suppose there are 10 rolls of film in a box, 3 of which are defective. Two rolls are to be selected one after another. What is the probability of selecting a defective roll followed by another defective roll? Solution: Let A = the first roll of film selected from the box being found defective Let B = the second roll selected being found defective So, P(A) = 3 10 and P ( B / A) =

2 9

P ( A and B ) = P ( A). P ( B / A) =

3 2 . = 0.07. 10 9 Example 14: Of 100 assembled components, 10 have a working defect and 20 have a structural defect. There is a good reason to assume that no component has both defects. What is the probability that randomly chosen components will have either type of defect? Solution: Let the event A and B be the component which has working defect and has structural defect respectively. Then it is given that

10 20 = 0.01,P(B) = = 0.02 and P(A & B) = 0. 100 100 Then P(A or B) = P(A) + P(B) P(A & B) = 0.01 + 0.02 0 = 0.03. P(A) =
Example 15: A survey of 200 retail grocery shops revealed following monthly income pattern: Monthly Income(Taka) Under Taka 20,000 20,000 to 30,000 30,000 and above Number of Shops 102 61 37

(a) What is the probability that a particular shop has monthly income under Taka 20,000? (b) What is the probability that a shop selected at random has either an income between Taka 20,000 and Taka 30,000 or an income of Taka 30,000 and more? Solution: Let the events A, B and C represent the income under three categories respectively. (a)Probability that a particular shop has monthly income under Taka 20,000 is

P(A) =
(b)

102 = 0.51. 200 61 37 + = 0.49. 200 200

P(A or B) = P(A) + P(B) =

Example 16: An MBA applies for a job in two firms X and Y. The probability of his being selected in firm X is 0.7 and being rejected at Y is 0.5. The probability of at least one of his applications being rejected is 0.6. What is the probability that he will be selected by one of the firms? Solution: Let A and B denote the event that an MBA will be selected in firm X and will be rejected in firm Y respectively. Then given that

P(A) = 0.7,P(A) = 1 0.7 = 0.3,P(B) = 0.5 P(B) = 1 0.5 = 0.5,P(A U B) = 0.6.

Since,

P(A I B) = 1 P(A I B) = 1 0.6 = 0.4, therefore, probability that he will be selected by one of the

firms is given by

P(A U B) = P(A) + P(B) P(A I B) = 0.7 + 0.5 0.4 = 0.8.

Thus, the probability of an MBA being selected by one of the firms is 0.8.

Example 17: A market research firm is interested in surveying certain attitudes in a small community. There are 125 households broken down according to income, ownership of a telephone and ownership of a TV.

Households with Monthly Income of Taka 8000 or less Telephone No Subscriber Telephone Own TV Set 27 20 No TV Set 18 10 Total 45 30

Households with Monthly Income above Taka 8000 Telephone No Telephone Subscriber 18 10 12 10 30 20

Total

75 50 125

(a)What is the probability of getting a TV owner if a household is selected at random? (b)If a household has an income of over Taka 8000 and is a telephone subscriber, what is the probability that he owns a TV set? (c)What is the conditional probability of selecting a household that owns a TV set given that the household is a telephone subscriber? (d) Are the events ownership of a TV and telephone subscriber statistically independent? Solution: (a) P (TV owner) =

75 = 0.6 . 125

(b)There are 30(=18+12) persons whose household income is above Taka 8000 and are also telephone subscribers. Out of these, 18 own TV sets. Hence, the probability of this group of persons having a TV set is

18 = 0.6 . 30
(c)Out of 75 households who are telephone subscribers, 45 households have TV sets. Hence the conditional probability of selecting a household that owns a TV set given that the household is a telephone subscriber is

45 = 0.6. 75
(d)Let A and B be the events representing TV owners and telephone subscribers respectively.

P ( A) =

The probability of a person being a telephone subscriber as well as a TV owner is

75 75 and P ( B) = . 125 125

45 . 125 75 75 9 = But, P ( A) P ( B ) = . 125 125 25 P ( A & B ) = P ( A I B ) = P ( AB ) =

We know that, if two events A and B are independent, then P ( A) P ( B ) = P ( A I B) . But for this problem, it is so. Hence they are independent. Example 18: A market survey was conducted in four divisions to find out the preference for brand A soap. The responses are shown below: Yes No No Opinion Total Dhaka 45 35 05 85 Chittagong 55 45 05 105 Rajshahi 60 35 05 100 Sylhet 50 45 05 100 Total 210 160 20 390

(a)What is the probability that a consumer selected at random, preferred brand A? (b)What is the probability that a consumer selected at random, preferred brand A and was from Rajshahi? (c)What is the probability that a consumer selected at random, preferred brand A given that he was from Rajshahi? (d)Given that a consumer preferred brand A, what is the probability that he was from Sylhet? Solution: Let X denote the event that a consumer selected at random preferred brand A. Also let C be the event that a consumer selected at random is from Rajshahi. Let M denote the event that a consumer selected at random is from Sylhet. (a) P ( X ) =

210 = 0.5398. 390 7

60 = 0.1538. 390 60 P( A I C ) 390 = 0.597 . = (c) P ( X C ) = 100 P (C ) 390 50 P( M I X ) 390 = 0.237 . = (d) P ( M X ) = 210 P( X ) 390
(b) P ( X

I C) =

Example 19: Suppose P (A) = 0.40 and P (B/A) = 0.30. What is the joint probability of A and B? P(B I A) P(A I B) P(A & B) P(A & B) = = 0.30 = P(A & B) = 0.12. Solution: We know P(B / A) = P(A) P(A) P(A) 0.40 Exercises: 1. Some people are in favor of imposing taxes on stock shares and some are against it. Two persons are selected and their opinions are reported. List the possible outcomes. Solution: Outcome 1 2 3 4 Person 1 A A F F 2 A F A F

2. A survey of 34 students at the Business School showed the following majors: Majors Accounting Finance Marketing Human Resource Management Management No of Students 10 5 3 6 10

Suppose you select a student and observe his or her major. a) What is the probability he or she is an accounting major? Ans. 5/34. b) Which concept of probability did you use to make this estimate? Ans. Empirical. 3. The marketing research department of a soft drink company plans to survey teenagers about a newly developed soft drink. Each will be asked to compare it with his or her favorite soft drink. a. What is the experiment? Ans. Asking teenagers to compare their reactions to a newly developed soft drink. b. What is one possible event? Ans. Answers will vary. One possibility is more than half of the respondents like it. 4. The first card selected from a standard 52-card deck was king. a. If it is returned to the deck, what is the probability that a king will be drawn on the second selection? Ans. 1/52. b. If the king is not replaced, what is the probability that a king will be drawn on the second selection? Ans.1/51 c. What is the probability that a king will be selected on the first draw from the deck and another king on the second draw (assuming that the first king was not replaced)? Ans. 1/52 + 1/51. 5. In each of the following cases, indicate whether classical, empirical or subjective probability is used. a) A basketball player makes 30 out of 50 foul shots. The probability is 0.6 that she makes the next foul shot attempted. Ans. Empirical.

b) A seven-member committee of students is formed to study environmental issues. What is the

likelihood that any one of the seven is chosen as the spokesperson? Ans. Classical. c) You purchase one of 5 million tickets sold for Lotto Canada. What is the likelihood you win the $1 million jackpot? Ans. Classical. 6. A firm will promote two employees out of a group of six men and three women. a) List the outcomes of this experiment if there is particular concern about gender equity. Ans. MM, MW, WM, WW. b) Which concept of probability would you use to estimate these probabilities? Ans. Classical. 7. A sample of 2000 licensed drivers revealed the following number of speeding violations. Number of Violations 0 1 2 3 4 5 or more Total Number of Drivers 1910 46 18 12 9 5 2000

a) b) c) d)

What is the experiment? Ans. Survey of drivers who committed speeding violations. List one possible event. Ans. 0, 0. What is the probability that a particular driver had exactly two speeding violations? Ans. 18/2000. What concept of probability does this illustrate? Ans. Empirical.

8. A survey of undergraduate students in the School of Business revealed the following regarding the gender and majors of the students: Gender Male Female Total Accounting 100 100 200 Major Management 150 50 200 Finance 50 50 100 Total 300 200 500

(a) What is the probability of selecting a female student? Ans. 200/500. (b) What is the probability of selecting finance or accounting major? Ans. 100/500 + 200/500. (c) What is the probability of selecting a female or an accounting major? Which rule or addition did
you apply? Ans. 200/500 + 200/500 100/200. General Rule of Addition.

(d) What is the probability of selecting an accounting major, given that the person selected is a
male? Ans. 100/200. (e) Suppose two students are selected randomly to attend a lunch with the president of the university. What is the probability that both of those selected are accounting majors? Ans. 200/500 X 199/499. 9. The Wood country sheriff classifies crimes by age (in year) of the criminal and whether the crime is violent or nonviolent. As shown below, a total of 150 crimes were reported by the sheriff last year. Type of Crime Violent Nonviolent Total Under 20 27 12 39 Age (on years) 20 to 40 41 34 75 Over 40 14 22 36 Total 82 68 150

(a) What is the probability of selecting a case to analyze and finding it involved a violent crime? Ans. 82/150. (b) What is the probability of selecting a case to analyze and finding the crime was committed by someone less than 40 years old? Ans. 39/150 + 75/150.

(c) What is the probability of selecting case that involved a violent crime or an offender less than 20
years old? Which rule of addition did you apply? Ans. 82/150 + 39/150 27/150. General Rule. (d) Give that a violent crime is selected for analysis, what is the probability that both are committed by a person under 20 years old? Ans. 27/82. (e) Two crimes are selected for review by a Judge. What is the probability that both are violent crimes? Ans. 82/150 X 81/149.