Chapter 7

Continuous Probability Distributions

7.2 Continuous Probability Distributions

As the number of values increases the has an A continuous random variableprobability of each value decreases. This is so because the sum of all the uncountably infinite number of values in the probabilities remains 1. interval (a,b). When the number of values continuous variable X will The probability that a approaches infinity (because X is continuous) the probability value is zero. Why? assume any particular of each value approaches 0.

7.3 The Normal Distribution

This is the most important continuous distribution considered here.
Many random variables can be properly modeled as normally distributed. Many distributions can be approximated by a normal distribution. The normal distribution is the cornerstone distribution of statistical inference.
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 Normal distribution
A random variable X with mean m and variance s2 is normally distributed if its probability density function is given by
f ( x) 1 e
(1/ 2 )[( x m )]2

s 2 where 3.14159 ... and e 2.71828 ...

A bell shaped distribution, symmetrical around m

How does the standard deviation affect the shape of f(x)? s= 2 s =3 s =4

How does the expected value affect the location of f(x)? m = 10 m = 11 m = 12

Finding Normal Probabilities

Two facts help calculate normal probabilities:
The normal distribution is symmetrical. Any normal distribution can be transformed into a specific normal distribution called

Example

STANDARD NORMAL DISTRIBUTIOIN

The time it takes to write a standard entrance exam is normally distributed, with a mean of 60 minutes and a standard deviation of 8 minutes. What is the probability that a student will finish the in between 60 and 70 minutes? 7

 Solution
If X denotes the time taken to write the exam, we seek the probability P(60<X<70). This probability can be calculated by creating a new normal variable the standard normal variable.
Every normal variable with some m and s, can be transformed into this Z.

X mx Z sx

Therefore, once probabilities for Z are calculated, probabilities of any normal variable can found.

E(Z) = 0

V(Z) = 1
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 Example - continued
60 - 60 X m 70 - 60 P(60<X<70) = P( < < ) s 8 8
= P(0<Z<1.25) To complete the calculation we need to compute the probability under the standard normal distribution

Standard normal probabilities have been calculated and are provided in a table . The tabulated probabilities correspond to the area between Z=0 and some Z = z0 >0

P(0<Z<z0)

Z=0
z 0.0 0.1 . . 1.0 . . 1.2 . . 0 0.0000 0.0398 . . 0.3413 . . 0.3849 . . 0.1 0.0040 0.0438 . . 0.3438 . . 0.3869 . . . 0.05 0.0199 0.0596 . . 0.3531 . . 0.3944 . . 0.06 0.0239 0.636 . . 0.3554 . . 0.3962 . .

Z = z0

. . .

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 Example - continued
60 - 60 X m 70 - 60 P(60<X<70) = P( < < ) s 8 8
0.3944 = P(0<Z<1.25) = 0.3944
z 0.0 0.1 . . 1.0 . . 1.2 . . 0 0.0000 0.0398 . . 0.3413 . . 0.3849 . . 0.1 0.0040 0.0438 . . 0.3438 . . 0.3869 . . .
0.3944 0.3944 0.3944 0.3944 0.3944

In this example z0 = 1.25

0.05 0.0199 0.0596 . . 0.3531 . . 0.3944 . . 0.06 0.0239 0.636 . . 0.3554 . . 0.3962 . .

. . .

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 The symmetry of the normal distribution makes it possible to calculate probabilities for negative values of Z using the table as follows:

-z0

+z0

P(-z0<Z<0) = P(0<Z<z0)
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 Example 7.2
Determine the following probabilities:
P(Z>1.47) = ?
0.5 - P(0<Z<1.47) = P(Z>1.47)

1.47

P(Z>1.47) = 0.5 - 0.4292 = 0.0708

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P(-2.25<Z<1.85) = ?

.4878 P(-2.25<Z<0) = ?

P(0<Z<1.85) = .4678 P(0<Z<2.25) = .4878

0 1.85 2.25

-2.25

P(-2.25<Z<1.85) = 0.4878 + 0.4678 = 0.9556

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P(.65<Z<1.36) = ?

P(0<Z<.65) = .2422

P(0<Z<1.36) = .4131

0 .65 1.36

P(.65<Z<1.36) = .4131 - .2422 = .1709

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 Example 7.3
The rate of return (X) on an investment is normally distributed with mean of 30% and standard deviation of 10% What is the probability that the return will exceed 55%?
55 - 30 ) = P(Z>2.5) 10 =.5 - P(0<Z<2.5) = .5 - .4938 = .0062
P(X>55) = P(Z>

m = 30%

X = 55% 0 Z =2.5
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 What is the probability that the return will be less than 22%?

22%

30%

P(X<22) = P(Z<

22 - 30 ) = P(Z< - .8) 10

-.8

.8

=P(Z>.8) = 0.5 - P(0<Z<.8) = 0.5 - .2881 = .2119

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 Example 7.4
If Z is a standard normal variable, determine the value z for which P(Z<z) = .6331.

0.6331 0 z .1331

z = .34

.5

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 Example 7.5
Determine z.025

Solution
zA is defined as the z value for which the area to the right of zA under the standard normal curve is A.
0.475 0.025 -1.96 - Z0.025 0 Z0.025 0.025 1.96

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Exponential Distribution
The exponential distribution can be used to model
the length of time between telephone calls the length of time between arrivals at a service station the life-time of electronic components.

When the number of occurrences of an event follows the Poisson distribution, the time between occurrences follows the exponential distribution.
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 Exponential distribution
a random variable is exponentially distributed if its probability density function is given by f(x) = le-lx, x>=0. l is a parameter of the distribution. (l>0) E(X) = 1/l V(X) = 1/l

P(X>a) =e-la.
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Exponential distribution for l = .5, 1, 2

2.5 2 1.5 1 0.5 0

f(x) = 2e-2x f(x) = 1e-1x f(x) = .5e-.5x

2
2.5 2 1.5 1

P(a<x<b) = e-la - e-lb

0.5 0

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 Example 7.6
Cars arrive randomly and independently to a tollbooth at an average of 360 cars per hour. Use the exponential distribution to find the probability that the next car will not arrive within half a minute. Solution
Let X denote the time (in minutes) that elapses before the next car arrives. X is exponentially distributed with l = 360/60 = 6 car per minute. P(X>.5) = e-6(.5) = .0498.

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 What is the probability that no car will arrive within the next half minute? Solution
If Y counts the number of cars that will arrive in the next half minute, then Y is a Poisson variable with m = (.5)(6) = 3 cars per half a minute. P(Y = 0) = e-3(30)/0! = .0498. Comment: If the first car will not arrive within the next half a minute then no car will arrives within the next half minute. Therefore, not surprisingly, the probability found here is the exact same probability found in the previous question.
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 Example 7.7
The lifetime of a transistor is exponentially distributed, with a mean of 1,000 hours. What is the probability that the transistor will last between 1,000 and 1,500 hours. Solution
Let X denote the lifetime of a transistor (in hours). E(X) =1000 = 1/l, so l = 1/1000 = .001. P(1000<X<1500) = e-(.001)(1000) - e-(.001)(1500) = .1448

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