Addition Theorem, Multiplication

Theorem, Baye's Theorem

(For M.B.A. I Semester)

by Prof. Nitin Karoulia

9033099006
 Statistics - Probability Additive Theorem

For Mutually Exclusive Events

The additive theorem of probability states if A and B are two mutually exclusive events
then the probability of either A or B is given by
P(A or B) =P(A) +P(B)
P(A∪B) =P(A) +P(B)
The theorem can he extended to three mutually exclusive events also as
P(A∪B∪C )=P(A) +P(B) +P(C)

Example
Problem Statement:
A card is drawn from a pack of 52, what is the probability that it is a king or a queen?
Solution:
Let Event (A) = Draw of a card of king
Event (B) Draw of a card of queen
P (card draw is king or queen) = P (card is king) + P (card is queen)
 Statistics - Probability Additive Theorem

For Non-Mutually Exclusive Events

In case there is a possibility of both events to occur then the additive
theorem is written as:
P(A or B) =P(A) +P(B) −P(A and B)
P(A ∪ B) =P(A) +P(B) −P(AB)
 Statistics - Probability Additive Theorem

Example
Problem Statement:
A shooter is known to hit a target 3 out of 7 shots; whereas another shooter is known
to hit the target 2 out of 5 shots. Find the probability of the target being hit at all
when both of them try.
Solution:
Probability of first shooter hitting the target P (A) = 3
7
Probability of second shooter hitting the target P (B) = 2
5
Event A and B are not mutually exclusive as both the shooters may hit target. Hence
the additive rule applicable is
 Statistics - Probability Multiplicative Theorem

For Independent Events

The theorem states that the probability of the simultaneous occurrence of two events
that are independent is given by the product of their individual probabilities.
P(A and B) = P(A) × P(B)
P(AB) = P(A) × P(B)
The theorem can he extended to three or more independent events also as
• P(A∩B∩C) = P(A) × P(B) × P(C) P(A,B and C) = P(A) × P(B) × P(C) Example
Example
Problem Statement:
A college has to appoint a lecturer who must be B.Com., MBA, and Ph. D, the
probability of which is 1/20, 1/25, and 1/40 respectively. Find the probability of
getting such a person to be appointed by the college.
Solution:
Probability of a person being a B.Com.P(A) =1/20
Probability of a person being a MBA P(B) = 1/25
Probability of a person being a Ph.D P(C) =1/40
Using multiplicative theorem for independent events
 Statistics - Probability Multiplicative Theorem

For Dependent Events (Conditional Probability)

As defined earlier, dependent events are those were the occurrences or non
occurrence of one event effects the outcome of next event. For such
events the earlier stated multiplicative theorem is not applicable. The
probability associated with such events is called as conditional probability
and is given by
P(A/B) = P(AB) or P(A∩B)
P(A) P(A)
 Statistics - Probability Multiplicative Theorem

Example
Problem Statement:
A coin is tossed 2 times. The toss resulted in one head and one tail. What is
the probability that the first throw resulted in a tail?
Solution:
The sample space of a coin tossed two times is given as S = {HH, HT, TH, TT}
Let Event A be the first throw resulting in a tail.
Event B be that one tail and one head occurred.
 Statistics - Probability Bayes Theorem

One of the most significant developments in the probability field has been the
development of Bayesian decision theory which has proved to be of
immense help in making decisions under uncertain conditions. The Bayes
Theorem was developed by a British Mathematician Rev. Thomas Bayes.
The probability given under Bayes theorem is also known by the name of
inverse probability, posterior probability or revised probability. This
theorem finds the probability of an event by considering the given sample
information; hence the name posterior probability. The bayes theorem is
based on the formula of conditional probability.
conditional probability of event A1 given event B is
P(A1/B) =P(A1 and B)
P(B)
Similarly probability of event A1 given event B is
P(A2/B) =P(A2 and B)
P(B)
 Statistics - Probability Bayes Theorem

Where
P(B) = P(A1 and B) + P(A2 and B)
P(B) = P(A1) × P(B/A1) +P(A2) × P(BA2)

P(A1/B) can be rewritten as

P(A1/B) = P(A1) × P(B/A1) x P(B/A1) + P(A2) x P(BA2)
P(A1)

Hence the general form of Bayes Theorem is

P(Ai/B) = P(Ai) × P(B/Ai)
∑ki=1 P(Ai) × P(B/Ai)

Where A1, A2...Ai...An are set of n mutually exclusive and exhaustive events.

P (A + B) = n (A) + n (B) – n (AB)
n
= n (A) + n (B) – n (AB)
n n n
Thus, P(A + B) = P(A) + P(B) – P(AB)
However, if A and B are mutually exclusive so that P(AB) = 0, then
P(A + B) = P(A) + P(B)

Illustration 5.2
Let us work out the probability of getting at least one Head when two coins are
tossed.
The probability for getting a Head on a coin, denoted as P(H), is = ½.
Also, the probability for getting a Tail on a coin, denoted as P(T), is = ½.
The event that there is a Head on at least one coin can be written as P (H + H),
and this according to the above Theorem of Total Probability, can be written
as
 P (H + H) = P(H) + P (H) – P(HH)
= ½ + ½ - ¼ (as there is only one point out of 4 points
corresponding to the event HH)
=¾
Example 5.4
A can solve 80% of the problems, while B can solve 90% of problems in a
Statistics book. A problem is selected at random. What is the probability
that at least one of them will solve it?
Solution:
Let,
A be the event that A can solve the problem, and
B be the event that B can solve the problem.
Then, it is given that
P(A) = 0.8 and P(B) = 0.9, and
We have to find the probability P(A + B)
By the Theorem of Total Probability, we have
P(A + B) = P(B) – P(AB)
While the probabilities P(A) and P(B) are given, P(AB) can be found by the
Multiplication Theorem as.
 P (AB) = P(A) P(B) = 0.8 x 0.9 = 0.72
Substituting the values of P(A), P(B) and P(AB), we get
P(A + B) = 0.8 + 0.9 – 0.8 x 0.9 = 1.7 – 0.72 = 0.98
Thus the required probability that at least one of A or B will solve the problem
is 0.98.
Example 5.6
In families with two children, what is the probability that a family will have
(i) One boy one girl ?
(ii) Two girls ?
(iii) Two boys ?
In the absence of any other information, it is assumed that the probability of
child being a boy or a girl is ½.
Let,
B represent the event that a child is a boy
G represent the event that a child is a girl.
Thus
P(B) = P(G) = 1
2
Further let,
B G represent the event that the first child is a boy and second child is a girl
G B represent the event that the first child is a girl and the second child is a boy
B B represent the event that both children are boys
G G represent the event that both children are girls

Now,
P(B B) = P(B) P(B) – by Multiplication Theorem
(as the probability of the second child being boy is independent
of whether the first child is boy or girl)
=1x1
2 2
=1
4

Similarly, P (G G) = P(G) P(G)

=1x1
2 2
=1
4
Now, the event that a family will have one boy and one girl can happen in two
ways – either B G or G B these events are mutually exclusive as either it will
be B G or G B. There is no other possibility.
Thus,
P(one boy and one girl) = P(B G) + P(G B) – by Addition Theorem
= P(B) P(G) + P(G) P(B) – by Multiplication Theorem
= 1+1
4 4
=1
2
Incidentally, it may be noted that P (one boy and one girl) + P(both boys) +
P(both girls)
= 1+1+ 1
2 4 4
=1
which is obvious as one of the three possibilities is bound to happen.
The above example can be extended to families with 3 children.
In a similar way, it can be shown that in a family with 3 children,
P(3 girls) = P(G) P(G) P(G) = 1
8
P( 1 boy, 2 girls) = P(BGG) + P(GBG) + P(GGB)
= 1+1+ 1
8 8 8
= 3
8
P( 2 boys, 1 girl) = P(BBG) + P(BGB) + P(GBB)
= 1+1+ 1
8 8 8
= 3
8
P(3 boys) = 1
8
It may be noted that
P(3 girls) + P(1 boy, 2 girls) + P(2 boys, 1 girl) + P(3 boys) = 1
Example 5.7
A speaks the truth in 60% and B in 75% of the cases. In what percentage of the
cases, they are likely to contradict each other stating the same fact?
Solution :
Let,
AT denote the event that A speaks the truth
AL denote the event that A speaks a lie
BT denote the event that B speaks the truth
BL denote the event that B speaks a lie
It is given that
P(AT) = 0.6
P(BT) = 0.75
Therefore,
P(AL) = 0.4
P(BL) = 0.25
While stating the same fact, the contraction will arise when
(i) A speaks the truth and B tells a lie, or
(ii) A tells a lie and B speaks the truth
Probability of (i) is
= P(AT BL)
= P(AT) P(BL) (assuming that they speak the truth or tell a lie
independent of each other)
= 0.6 x 0.25 = 0.15
Probability of (ii) is
= P(AL BT)
= P(AL) P(BT) (assuming that they speak the truth or tell a lie
independent of each other)
= 0.4 x 0.75 = 0.3
Therefore, the required probability is
= (1) + (2) (by Addition Theorem of Probability)
= 0.15 + 0.3 = 0.45
Example 5.8
An investment consultant predicts that the odds against the price of a certain
stock going up are 2:1 and odds in favour of the price remaining the same
are 1:3. What is the probability that the stock will go down?
Solution:
It is given that
Odds against the price going up are 2:1
This means that
P(price not going up) = 2
3
If the stock price does not go up, it will either remain the same or will go down.
Therefore,
P (price remains same) + P(price goes down) = 2
3 (1)
Now, since odds in favour of the price remaining the same is 1:3, therefore, the
probability of price remaining the same is ¼.
Substituting this value in equation (1), we get
1 + P(price going down) = 2
4 3
Therefore,
P(price going down) = 2 – 1
3 4
=5
12

Example 5.10
A salesman is known to sell a product in 3 out of 5 attempts while another
salesman in 2 out of 5 attempts, Find the probability that
(i) No sale will take place when they both try to sell the product
(ii) Either of them will succeed in selling the product.

Solution:
Let,
A represent the event that first salesman is able to sell the product
Ac represent the event that first salesman is not able to sell the product
B represent the event that second salesman is able to sell the product
Bc represent the event that second salesman is not able to sell the product
It is given that
P(A) = 3/5 and P(B) = 2/5
Therefore,
P(Ac ) = 1 – 3/5 = 2/5 and P(Bc ) = 1 – 2/5 = 3/5
The required probabilities are calculated as follows:
(i) P (no sale will be affected when they both try to sell the product)
= P(Ac Bc ) = P(Ac ) P(Bc ) (by Multiplication Theorem)
= (2/5) x (3/5)
= 6/25
= 0.24
(ii) P (either of them will succeed in selling the product)
= P(A) + P(B) – P(AB) (by Theorem of Total Probability)
= (3/5) + (2/5) – P(A) P(B) (by Multiplication Theorem)
= 1 – (3/5) (2/5) = 1 – 6/25
= 19/25
= 0.76

Illustration 5.4
Identifying managerial prospects who are both talented and motivated is
difficult. A personnel manager constructed the Table, shown here to define
nine combinations of talent- motivation levels. The numbers in the Table
Are the manager’s estimates of the probabilities that a managerial prospect will
be classified in the respective categories.

Talent
High Medium Low
Motivation High 0.05 0.16 0.05
Medium 0.19 0.32 0.05

Illustration 5.5
An investment analyst presents the following table giving probabilities of next
year’s economic conditions normal or good or very good, in the country ,
and probabilities of the movement increase or decline.
Growth in GDP Movement in stock market
Conditions Increase Decline
Zero Growth (same) 0.33 0.17
Positive (≥ + 1%) 0.24 0.06
Negative ( < - 1% 0.18 0.02
From this table, we can conclude that the probabilities (also referred to as
marginal probabilities) of the three economic conditions are:
P(Zero Growth) = 0.33 + 0.17 = 0.50
P(Positive Growth) = 0.24 + 0.06 = 0.30
P(Negative Growth) = 0.18 + 0.02 = 0.20
Similarly, the probabilities (referred to as marginal probabilities) of an increase
or decrease in the stock market are :
P(Increase) = 0.33 + 0.24 + 0.18 = 0.75
P(Decrease) = 0.17 + 0.06 + 0.02 = 0.25
Further, the probability that the market will increase, given that the GDP growth
will be positive, is
= Probability that the market will increase
Probability (GDP Growth will be positive)
= 0.24
0.24 + 0.06
= 0.24 = 4
0.30 5
Example 5.11
A class consists of 100 students; 25 of them are girls and 75 boys; 80 of them
are rich and 20 are poor; 40 of them have brown eyes and 60 have black
eyes. What is the probability of selecting a brown eyed rich girl?
Solution:
Let,
A be the event that the selected student is a girl
B be the event that the selected student is rich
C be the event that the selected student is brown eyed.
Then it is given that
P(A) = 25/100 = 1/4
P(B) = 80/100 = 4/5
P (C) = 40/100 = 4/10 = 2/5
Now, the probability of a student being brown eyed rich girl is given by P(ABC).
Assuming that the sex, richness and colour of eyes are independent of each
other, we can use the Multiplication Theorem of Probability, and therefore,
P(ABC) = P(A) P(B) P(C.) = (1/4) x (4/5) x(2/5)
= 2/25
Example 5.12
A candidate is selected for interview for 3 posts. For the first post, there are 3
candidates, for the second, 4 and for the third post there are 2 candidates.
What is the probability that the candidate is selected for at least one post.
Solution:
Let,
A represent the event that a candidate is selected for the first post
B represent the event that a candidate is selected for the second post
C represent the event that a candidate is selected for the third post
In the absence of any other information, it is assumed that all candidates have
equal chance of selection, and therefore, the probability of a candidate
being selected is
= 1
Number of candidates for a post
According, we can presume that it is given that
P(A) = 1/3 , P(B) = ¼ and P(C ) = ½
Therefore, the probability that a candidate is selected for at least one post is
given by the Theorem of Total Probability as
 P( A + B + C ) = P(A) + P(B) + P( C ) – P(AB) – P(AC) – P(BC) + P(ABC)

Assuming that selection for one post is independent of selection for other
posts, we have, by Multiplication Theorem of Probability.
P(AB) = P(A) P(B) = (1/3) x (1/4) = 1/12
P(AC) = P(A) P(C ) = (1/3) x (1/2) = 1/6
P(BC) = P(B) P(C ) = (1/4) x (1/2) = 1/8
P(ABC) = P(A) P(B) P( C) = (1/4) x (1/3) x (1/2) = 1/24

Substituting the values of above probabilities, we get

P( A + B + C) = 1 + 1 + 1 - 1 - 1 - 1 + 1
3 4 2 12 6 8 24
= 8 + 6 + 12 – 2 – 4 – 3 + 1
24
= 18
24
=3
4
Thank you