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PROBABILITY
1. Definition of Intersection and Union
Intersection
Union
and complement
Probability of event
( )=
( )
( )
0 ( )1
Probability of complement
( ) = 1 ( )
Rule of Intersection
( )= ( ) ( )
(
) = ( ) ( ) (
Two events
More two events
Rule of Union
( )= ( )+ ( ) ( )
(
) = 1 ( ) ( ) ( )
2. Probability of event
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Example 2.1: (Case of Intersection Rule for two events)
PROBLEM:
A financial analyst believes that if interest rates decrease in a given period, then the
probability that the stock market will go up is 0.80. The analyst further believes that
interest rates have a 0.40 chance of decreasing during the period in question. Given
the above information, what is the probability that the market will go up and interest
rates will go down during the period in question?
SOLUTION:
Let
The probability that the market will go up and interest rates will go down during the
period in question:
( )=
( ) ( ) = (0.80)(0.40) = 0.32
PROBLEM:
The projected probability of increase in online holiday sales from 2004 to 2005 is
95% in the United States, 90% in Australia, and 85% in Japan. Assume these
probabilities are independent. What is the probability that holiday sales will increase
in all three countries from 2004 to 2005?
SOLUTION:
Let
The probability that holiday sales will increase in all three countries from 2004 to
2005:
(
)=
( ) ( ) ( ) = (0.95)(0.90)(0.85) 0.7268
Example 2.2: (Case of Intersection Rule for more than two events)
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Example 2.3: (Case of Union Rule for two events)
PROBLEM:
SOLUTION:
Let
A be the event that the investors studied invest in public sector funds
B be the event that the investors studied invest in corporate funds
( ) = 0.08, ( ) = 0.06, ( ) = 0.02
The probability that this investor has either public or corporate funds:
( ) = ( )+ ( )
Example 2.4: (Case of Union Rule for more than two events)
PROBLEM:
SOLUTION:
)= (
)
= 1 ( ) ( ) ( ) ( ) ( )
= 1 (0.35)(0.35)(0.35)(0.35)(0.35) = 1 (0.35) = 0.9947
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4. Dependence and Independence of Events
Conditional Probability (Dependence of Events)
( )
( )
( )
( | )=
( )
( | )=
or
( )= ( | ) ( )
or
( )= ( | ) ( )
Independence of Events
( | )= ( )
( | )= ( )
PROBLEM:
A club has 120 members, of whom 35 play chess, 58 play bridge, and 27 play both
chess and bridge. If a member of the club is randomly chosen, what is the conditional
probability that she
(a) plays chess given that she plays bridge;
(b) plays bridge given that she plays chess?
SOLUTION:
Let
( ) = 35/120
( ) = 58/120
( ) = 27/120
(a) The conditional probability that she plays chess given that she plays bridge:
( | )=
( ) 27/120 27
=
=
0.4655
( )
58/120 58
(b) The conditional probability that she plays bridge given that she plays chess:
( | )=
( ) 27/120 27
=
=
0.7714
( )
35/120 35
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5. The Relationship between the Two Events A and B
Mutually Exclusive Events
Two events are called mutually exclusive when the sets corresponding to
two events are disjoint.
For mutually exclusive events A and B:
P(A B) = 0
Independent Events
Two events are called independent when the probability of the intersection
of two events is equal to
P(A B) = P(A)P(B)
PROBLEM:
A machine produces components for use in cellular phones. At any given time, the
machine may be in one, and only one, of three states: operational, out of control, or
down. What is the relationship between the two events machine is out of control
and machine is down?
SOLUTION:
The relationship between the two events machine is out of control and machine is
down is mutually exclusive because at any given time, the machine may be in one,
and only one, of three states.
SOLUTION:
Let
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6. Combinational Concepts
Combinational Concepts
=
Permutations
Combinations
!
( )!
!
=
( )!
PROBLEM:
There are 20 people who work in an office together. Four of these people are
selected to go to the same conference together. How many such selections are
possible?
SOLUTION:
PROBLEM:
There are 20 people who work in an office together. Four of these people are
selected to attend four different conferences. The first person selected will go to a
conference in New York, the second will go to Chicago, the third to San Francisco,
and the fourth to Miami. How many such selections are possible?
SOLUTION:
PROBLEM :
Serial numbers for a product are to be made using three letters (using any letter of
the alphabet) followed by two single-digit numbers. For example, JGR29 is one such
serial number. How many such serial numbers are possible if neither letters nor
numbers can be repeated?
SOLUTION:
The solution involves the intersection rule and permutations. First three letters must
be chosen from 26, and since order is important, this is
. Then two digits must
be chosen from 10, and this is
. By the intersection rule, the number of possible
)(
)= ,
serial numbers is (
,
.
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7. Law of Total Probability and Bayes Theorem
(Understanding this concept may be easier for you if you use the chart to
analyze the concept and its problems instead of the formulas in your textbook)
You ask your neighbor to water a sickly plant while you are on vacation. Without
water it will die with probability 0.8; with water it will die with probability 0.15. You
are 90 percent certain that your neighbor will remember to water the plant.
(a) What is the probability that the plant will be alive when you certain?
(b) If it is dead, what is the probability your neighbor forgot to water it?
a. The probability that the plant will be alive when you certain is equal to
(
)=
0.1 0.8
= 0.372
0.9 0.15 + 0.1 0.8
SOLUTION:
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Example 7.2: (Case of Bayes Theorem)
PROBLEM:
SOLUTION:
(a) The probability that the student answer correctly a certain question:
) = 0.6 1.0 + 0.4 0.2 = 17/25
(b) The probability that the student knew the answer given that he answered it
correctly:
(
)
|
0.6 1.0
=
= 15/17 0.8824
0.6 1.0 + 0.4 0.2