A Survey of Probability Concepts

Chapter 5

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Learning Objectives
LO5-1 Define the terms probability, experiment, event, and
outcome
LO5-2 Assign probabilities using a classical, empirical, or
subjective approach
LO5-3 Calculate probabilities using the rules of addition
LO5-4 Calculate probabilities using the rules of
multiplication
LO5-5 Compute probabilities using a contingency table
LO5-6 Determine the number of outcomes using
principles of counting

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Probability

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Probability (2 of 2)
EXPERIMENT A process that leads to the occurrence of one and only
one of several possible results.

OUTCOME A particular result of an experiment.

EVENT A collection of one or more outcomes of an experiment.

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Classical Probability
 The classical definition of probability applies when there
are n equally likely outcomes to an experiment

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Empirical Probability
 The empirical definition occurs when the number of
times an event happens is divided by the number of
outcomes
EMPIRICAL PROBABILITY The probability of an event happening is the
fraction of the time similar events happened in the past.

LAW OF LARGE NUMBERS Over a large number of trials, the

empirical probability of an event will approach its true probability.

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Subjective Probability

SUBJECTIVE CONCEPT OF PROBABILTIY The likelihood (probability)

of a particular event happening that is assigned by an individual based on
whatever information is available.

 Examples of subjective probability are:

 Estimating the likelihood the New England Patriots will be in
the Super Bowl next year
 Estimating the likelihood the U.S. budget deficit will be reduced
by half in the next 10 years

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Summary of Approaches to Probability

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Rules of Addition
 The rules of addition refer to the probability that any two
or more events can occur
 The special rule of addition is used when the events are
mutually exclusive

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 Rules of Addition Example
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 variation in the size of the beans and other vegetables, a package
might be underweight or overweight. A check of 4,000 packages filled in
the past month revealed:

 What is the probability that a particular package will be either underweight or

overweight?
P(A or C) = P(A) + P(C) = .025 + .075 = .10

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Complement Rule
 The complement rule is used to determine the
probability of an event happening by subtracting the
probability of an event not happening

 You can also use the complement rule

P(A or C) = P(~B) = 1 − P(B) = 1 − .900 = .10

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General Rule of Addition
 The general rule of addition is used when the events are
not mutually exclusive

JOINT PROBABILITY A probability that measures the likelihood two

or more events will happen concurrently.

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General Rule of Addition Example
A sample of 200 tourists in Florida shows 120 went to Disney,
100 went to Busch Gardens, and 60 visited both.

P(Disney) =120/200 = .60

P(Busch) =100/200 = .50
P(Disney and Busch) = 60/200 = .30

P(Disney or Busch) = P(Disney) + P(Busch) − P (Disney and Busch)

= .60 + .50 − .30 = .80

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Special Rule of Multiplication
 The rules of multiplication are applied when two or more
events occur simultaneously
 The special rule of multiplication refers to events that are
independent
INDEPENDENCE The occurrence of one event has no effect on the
probability of the occurrence of another event.

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?
P(R1 and R2) = P(R1)P(R2) = (.60)(.60) = .36
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General Rule of Multiplication
 The general rule of multiplication refers to events that
are not independent
 A conditional probability is the likelihood an event will
happen, given that another event has already happened
CONDITIONAL PROBABILITY The probability of a particular event
occurring, given that another event has occurred.

 The conditional probability is represented a P(B|A) and is

read, the probability of B given A

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General Rule of Multiplication Example

A golfer has 12 golf shirts in his closet. Suppose 9 of these

shirts are white and the others are blue. He gets dressed in
the dark, so he just grabs a shirt and puts in on. He plays golf
two days in a row and does not return the shirts to the
closet. What is the probability both shirts are white?

P(W1 and W2) = P(W1)P(W2|W1) = ( )( = .55

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 Contingency Tables

CONTINGENCY TABLE A table used to classify sample observations

according to two or more identifiable categories or classes.

 One hundred fifty adults were asked if they were older than
50 years of age and the number of Facebook accounts they
used. The following table summarizes the results.

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Tree Diagrams
 A tree diagram is a visual that is helpful in organizing and
calculating probabilities for problems with several stages
 Each stage of the problem is represented by a branch of
the tree
 Label the branches with the probabilities

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Tree Diagram Example

5-19
Multiplication Formula
 The multiplication formula states that if there are n ways
of doing one thing, and m ways of doing another thing,
then there are m*n ways of doing both

 This can be extended to more than two events. For three

events m, n, and o:
 Total number of arrangements = (m)(n)(o)

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Multiplication Formula Example
 When the American Red Cross receives a blood donation, the blood is
analyzed and classified by group 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?
 Total possible arrangements = (m) (n) = (4) (2) = 8

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The Permutation Formula
 Another counting formula used to determine a total
number of outcomes
PERMUTATION Any arrangement of r objects selected from a single group
of n possible objects.

There are three electronic parts to be assembled, so n=3. Because all

three are to be inserted into the plug-in component, r=3.
! ! !
3P3 = !
=
!
=6
Label the parts A, B, and C ABC BAC CAB ACB BCA CBA
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The Combination Formula
 Another counting formula useful in determining the total
number of outcomes
 A combination is an arrangement where the order of the
objects selected is not important

The Grand 16 movie theater uses teams of three employees to work the concession
stand each evening. There are seven employees available to work. How many different
teams can be scheduled?
! ! !
7C3 = ! !
=
! !
=
! !
= 35

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 Chapter 5 Practice Problems

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Question 3 LO5-2

A survey of 34 students at the Wall College of Business

showed the following majors:

 From the 34 students, suppose you randomly select a

student.
 What is the probability he or she is a management major?
 Which concept of probability did you use to make this
estimate?

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Question 5 LO5-2

In each of the following cases, indicate whether classical,

empirical, or subjective probability is used.

1. A baseball player gets a hit in 30 out of 100 times at bat. The

probability is .3 that he gets a hit in his next at bat.
2. A seven-member committee of students is formed to study
environmental issues. What is the likelihood that any one of
the seven is randomly chosen as the spokesperson?
3. You purchase a ticket for the Lotto Canada lottery. Over five
million tickets were sold. What is the likelihood you will win
the $1 million jackpot?
4. The probability of an earthquake in northern California in
the next 10 years above 5.0 on the Richter Scale is .80.

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Question 13 LO5-3

A study of 200 advertising firms revealed their income after

taxes:

1. What is the probability an advertising firm selected at

random has under $1 million in income after taxes?
2. What is the probability an advertising firm selected at
random has either an income between $1 million and
$20 million, or an income of $20 million or more? What
rule of probability was applied?
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Question 21 LO5-3

The aquarium at Sea Critters Depot contains 140 fish.

Eighty of these fish are green swordtails (44 female and 36
male) and 60 are orange swordtails (36 female and 24
males). A fish is randomly captured from the aquarium:

1. What is the probability the selected fish is a green

swordtail?
2. What is the probability the selected fish is male?
3. What is the probability the selected fish is a male green
swordtail?
4. What is the probability the selected fish is either a male
or a green swordtail?

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Question 25 LO5-4

 A local bank reports that 80% of its customers maintain a

checking account, 60% have a savings account, and 50%
have both. If a customer is chosen at random:

1. What is the probability the customer has either a

checking or a savings account?
2. What is the probability the customer does not have
either a checking or a savings account?

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Question 29 LO5-5
 Each salesperson at Puchett, Sheets, and Hogan Insurance Agency is
rated either below average, average, or above average with respect
to sales ability. Each salesperson also is rated with respect to his or
her potential for advancement—either fair, good, or excellent. These
traits for the 500 salespeople were cross-classified into the
following table.

1. What is this table called?

2. What is the probability a salesperson selected at random will have
above average sales ability and excellent potential for
advancement?
3. Construct a tree diagram showing all the probabilities, conditional
probabilities, and joint probabilities.
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Question 37 LO5-7

 An overnight express company must include five cities on

its route. How many different routes are possible,
assuming that it does not matter in which order the cities
are included in the routing?

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