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Statistics With Economics and Business Applications: Chapter 4 Useful Discrete Probability Distributions
Statistics With Economics and Business Applications: Chapter 4 Useful Discrete Probability Distributions
Business Applications
x p(x)
0 1/8
1 3/8
2 3/8
3 1/8
Note 6 of 5E
The Binomial Random Variable
Many situations in real life resemble the coin
toss, but the coin is not necessarily fair, so that
P(H) 1/2.
Example: A geneticist samples 10
people and counts the number who
have a gene linked to Alzheimers
disease.
Coin: Person Number of tosses: n = 10
Head: Has gene P(has gene) = proportion
Distribution
For a binomial experiment with n trials and
probability p of success on a given trial, the
probability of k successes in n trials is
n!
P( x k ) C p q
n k n k
k n k
p q for k 0,1,2,...n.
k!(n k )!
k
n!
Recall C n
k!(n k )!
k
Mean: np
Variance : npq
2
Note 6 of 5E
Example
A marksman hits a target 80% of the
time. He fires five shots at the target. What is
the probability that exactly 3 shots hit the
target?
n= 5 success = hit p = .8 x = # of hits
5!
P( x 3) C p q
n
3
3 n3
(.8)3 (.2)53
3!2!
Note 6 of 5E
Example
5! 5!
(.8) (.2)
4 1
(.8)5 (.2) 0
4!1! 5!0!
Note 6 of 5E
Cumulative
Probability Tables
You can use the cumulative probability tables
to find probabilities for selected binomial
distributions.
Find the table for the correct value of n.
Find the column for the correct value of p.
The row marked k gives the cumulative
probability, P(x k) = P(x = 0) ++ P(x = k)
Note 6 of 5E
Example
k p = .80
0 .000 What is the probability that exactly 3
1 .007 shots hit the target?
2 .058
3 .263
P(x = 3) = P(x 3) P(x 2)
4 .672
5 1.000
= .263 - .058
= .205 Check from formula:
P(x = 3) = .2048
Note 6 of 5E
Example
k p = .80
0 .000 What is the probability that more
1 .007 than 3 shots hit the target?
2 .058
3 .263
P(x > 3) = 1 - P(x 3)
4 .672
5 1.000
= 1 - .263 = .737
Check from formula:
P(x > 3) = .7373
Note 6 of 5E
Example
Would it be unusual to find that none
of the shots hit the target?
P(x = 0) = P(x 0) = 0
What is the probability that less than 3 shots hit
the target?
P(x < 3) = P(x 2) = 0.058
Standarddeviation: npq
5(.8)(.2) .89
Note 6 of 5E
The Poisson Random Variable
The Poisson random variable x is often a
model for data that represent the number of
occurrences of a specified event in a given
unit of time or space.
Examples:
The number of calls received by a
switchboard during a given period of time.
The number of machine breakdowns in a day
The number of traffic accidents at a given
intersection during a given time period.
Note 6 of 5E
The Poisson Probability
Distribution
Let x a Poisson random variable. The
probability of k occurrences of this event is
k e
P( x k )
k!
For values of k = 0, 1, 2, The mean and
standard deviation of the Poisson random
variable are
Mean:
Standard deviation:
Note 6 of 5E
Example
The average number of traffic accidents on a
certain section of highway is two per week.
Find the probability of exactly one accident
during a one-week period.
k 2
e
1
2e 2
P( x 1) 2e .2707
k! 1!
Note 6 of 5E
Cumulative
Probability Tables
You can use the cumulative probability tables
to find probabilities for selected Poisson
distributions.
Note 6 of 5E
Example
k =2 What is the probability that there is
0 .135 exactly 1 accident?
1 .406
2 .677
3 .857
P(x = 1) = P(x 1) P(x 0)
4 .947
5 .983
= .406 - .135
6 .995 = .271 Check from formula:
P(x = 1) = .2707
7 .999
8 1.000
Note 6 of 5E
Example
k =2 What is the probability that 8 or more
0 .135 accidents happen?
1 .406
2 .677
3 .857 P(x 8) = 1 - P(x < 8)
4 .947 = 1 P(x 7)
5 .983 = 1 - .999 = .001
6 .995
7 .999
8 1.000
Note 6 of 5E
m
The Hypergeometric m
m
m
m
m
m
Probability Distribution
A bowl contains M red M&M candies and N-
M blue M&M candies. Select n candies from
the bowl and record x the number of red
candies selected. Define a red M&M to be
a success.
The probability of exactly k successes in n trials is
M M N
C C
P( x k ) k
N
nk
C n Note 6 of 5E
The Mean and Variance
M
Mean : n
N
M N M N n
Variance : n
2
N N N 1
Note 6 of 5E
Example
A package of 8 AA batteries contains 2
batteries that are defective. A student randomly
selects four batteries and replaces the batteries
in his calculator. What is the probability that all
four batteries work?
6 2
CC
Success = working battery P( x 4) 4
8
0
N=8 C4
M=6 6(5) / 2(1) 15
n=4 8(7)(6)(5) / 4(3)( 2)(1) 70
Note 6 of 5E
Example
What are the mean and variance for the
number of batteries that work?
M 6
n 4 3
N 8
M N M N n
n
2
N N N 1
6 2 4
4 .4286
8 8 7
Note 6 of 5E
Key Concepts
The Binomial Random Variable
1. Five characteristics: n identical trials, each resulting in
either success S or failure F; probability of success is p and
remains constant from trial to trial; trials are independent; and
x is the number of successes in n trials.
2. Calculating binomial probabilities
n k nk
a. Formula: P( x k ) Ck p q
b. Cumulative binomial tables
Note 6 of 5E
Key Concepts
II. The Poisson Random Variable
1. The number of events that occur in a period of time or
space, during which an average of such events are expected
to occur
2. Calculating Poisson probabilities
k e
P( x k )
a. Formula: k!
b. Cumulative Poisson tables
Note 6 of 5E
Key Concepts
III. The Hypergeometric Random Variable
1. The number of successes in a sample of size n from a finite
population containing M successes and N M failures
2. Formula for the probability of k successes in n trials:
CkM CnMk N
P( x k )
CnN
3. Mean of the hypergeometric random variable:
M
n
N
4. Variance and standard deviation:
M N M N n
n
2
N N N 1
Note 6 of 5E