A Survey of Probability Concepts

INTRODUCTION
• Descriptive statistics is concerned with summarizing
data collected from past events.
• We now turn to the second facet of statistics, namely,
computing the chance that something will occur in the
future. This facet of statistics is called statistical
inference or inferential statistics.
• Statistical inference deals with conclusions about a
population based on a sample taken from that
population.
• Because there is uncertainty in decision making, it is APPROACHES TO ASSIGNING PROBABILITIES
important that all the known risks involved be There are three ways to assign a probability to an event:
scientifically evaluated. Helpful in this evaluation is classical, empirical, and subjective.
probability theory, often referred to as the science of Classical probability is based on the assumption that the
uncertainty. outcomes of anexperimentare equally likely.

PROBABILITY
• A numerical value that describes the chance that EXAMPLE
something will happen. • Consider an experiment of rolling a six-sided die. What
• A value between zero and one, inclusive, describing
is the probability of the event “an even numberof spots
the relative possibility (chance or likelihood) an event
appearface up”? SOLUTION
will occur.
• Thepossible outcomes are:

• Sometimes, the likelihood of an event is expressed

using the term odds.
• To explain, someone says the odds are “five to two”
MUTUALLY EXCLUSIVE The occurrence of one event
that an event will occur. This means that in a total of
means that none of the other events can occur at the
seven trials (5 + 2), the event will occur five times and
same time.
not occur two times.
COLLECTIVELY EXHAUSTIVE At least one of the events
• Using odds, we can compute the probability that the
must occur when an experiment is conducted.
event occurs as 5/(5 + 2) or 5/7. So, if the odds in favor
of an event are x to y, the probability of the event is x/(x
“an even number” and “an odd number” in the die-
+ y).
tossing experiment”
Three key words are used in the study of probability:
• If the set of events is collectively exhaustive and the
 EXPERIMENT A process that leads to the events are mutually exclusive, the sum of the
occurrence of one and only one of several probabilities is 1.
possible results. • The classical approach to probability can also be
 OUTCOMEAparticular result of an experiment. applied to lotteries.
 EVENT A collection of one or more outcomes of
an experiment.
• A person buys a lottery ticket and selects three • If two events A and B are mutually exclusive, the
numbers between0and9. special rule of addition states that the probability of one
• One way to win is to match the numbers and the order or the other event’s occurring equals the sum of their
of the numbers. probabilities.
Given that 1,000 possible outcomes exist (000 through
999), the probability of winning with any three-digit
numberis 0.001, or 1 in 1,000.

Subjective Probability
• The likelihood (probability) of a particular event
happening that is assigned by an individual based on
whatever information is available. Illustrations of
subjective probability are:
• Estimating the likelihood the New England
Patriots will play in the Super Bowl nextyear.
• Estimating the likelihood you are involved in an
automobile accident during the next 12 months.
• Estimating the likelihood the U.S. budget deficit
will be reduced by half in the next 10 years.

RULES OF ADDITION FOR COMPUTING PROBABILITIES

There are two rules of addition, the special rule of
addition and the general rule of addition.
Special Rule of Addition EXAMPLE
• When we use the special rule of addition, the events • Referring to the previous example/solution, the
must be mutually exclusive. probability a bag of mixed vegetables is underweight is
.025 and the probability of an overweight bag is .075. • If we compare the general and special rules of
Use the complement rule to show the probability of a addition, the important difference is determining if the
satisfactory bag is .900. events are mutually exclusive.
• Showthesolution using a Venn diagram • If the events are mutually exclusive, then the joint
SOLUTION probability P(A and B) is 0 and we could use the special
• The probability the bag is unsatisfactory equals the rule of addition.
probability the bag is overweight plus the probability it is • Otherwise, we must account for the joint probability
underweight. and use the general rule of addition.
• That is, P(A or C) = P(A) + P(C) = .025 + .075 = .100.
• The bag is satisfactory if it is not underweight or
overweight,
• so P(B) = 1 −*P(A) + P(C)+ =1 − *.025 +.075+= 0.900.

The General Rule of Addition

• The outcomes of an experiment may not be mutually
exclusive.
• For example, the Florida Tourist Commission selected a
sample of 200 tourists who visited the state during the
year. The survey revealed that 120 tourists went to
Disney World and 100 went to Busch Gardens.
• What is the probability that a person selected visited
either Disney World or Busch Gardens?
RULES OF MULTIPLICATION TO CALCULATE PROBABILITY
• The rules for computing the likelihood that two events
both happen, or their joint probability.
• For example, 16% of the 2020 tax returns were
prepared by H&R Block and 75% of those returns
showed a refund. What is the likelihood a person’s tax
form was prepared by H&R Block and the person
received a refund?
• There are two rules of multiplication: the special rule
and the general rule
Special Rule of Multiplication
• For two independent events A and B, the probability
that A and B will both occur is found by multiplying the
two probabilities.
INDEPENDENCE The occurrence of one event has no
effect on the probability of the occurrence of another
event.
EXAMPLE
• A survey by the American Automobile Association
(AAA) revealed 60% of its members made airline
reservations last year. Two members are selected at
random.
• What is the probability both made airline reservations
last year? What are the probabilities for the three other
combinations?

General Rule of Multiplication

• For two events, A and B, that are not independent, the Determine the probability of:
conditional probability is represented as P(B | A), and 1. Selecting an adult who attended six or more movies
expressed as the probability of B given A. per month.
• Or the probability of B is conditional on the occurrence 2. Selecting an adult who attended two or fewer movies
and effect of event A. per month
3. Selecting an adult who attended six or more movies
CONDITIONAL PROBABILITY -The probability of a per month or is 60 years of age or older.
particular event occurring, given that another event has 4. Selecting an adult who attended six or more movies
occurred. per month given the person is 60 years of age or older.
5. Selecting an adult who attended six or more movies
per month and is 60 years of age or older. Determine the
independence of:
6. Number of movies per month attended and the age of
the adult.
Tree Diagrams
A tree diagram is a visual that is helpful in organizing and
calculating probabilities for problems similar to the
previous example/solution. This type of problem
involves several stages and each stage is illustrated with
a branch of the tree. The branches of a tree diagram are
labeled with probabilities.

PRINCIPLES OF COUNTING
The Multiplication Formula
• If there are m ways of doing one thing and n ways of
doing another thing, there are m × n ways of doing both.
Total number of arrangements = (m)(n) EXAMPLE
• This can be extended to more than two events. For • Three electronic parts, a transistor, an LED, and a
three events m, n, and o: synthesizer, are assembled into a plug-in component for
Total number of arrangements = (m)(n)(o) an HDTV. The parts can be assembled in any order. How
many different ways can the three parts be assembled?
SOLUTION
EXAMPLE • There are three electronic parts to be assembled, so n
• When the American Red Cross receives a blood = 3. Because all three are to be inserted into the plug-in
donation, the blood is analyzed and classified by group component, r = 3.
and Rh factor. There are four blood groups: A, B, AB, and
O. The Rh factor can be either positive or negative.
• How many different blood types are there?
SOLUTION
• In this case there are a small number of possibilities, so
we could use a tree diagram to count them. We see in
the following diagram there are eight possibilities.

EXAMPLE
• The Fast Media Company is producing a 1-minute
video advertisement. In the production process, eight
different video segments were made. To make the 1-
minute ad, they can select only three of the eight
segments.
• How many different ways can the eight video segments
be arranged in the three spaces available in the ad?