Lecture 9

Calculating Probability
Probability, which gives the likelihood of occurrence of an event, is
denoted by P. The probability that a simple event Ei will occur is
denoted by P(Ei), and the probability that a compound event A will
occur is denoted by P(A).

Definition
Probability Probability is a numerical measure of the likelihood that a
specific event will occur.

9.1 Properties of Probability

1. The probability of an event always lies in the range 0 to 1.
Whether it is a simple or a compound event, the probability of an event
is never less than 0 or greater than 1. Using mathematical notation, we
can write this property as follows.

First Property of Probability

0≤ P(Ei)≤ 1
0 ≤ P(A)≤ 1

An event that cannot occur has zero probability; such an event is called
an impossible event.
An event that is certain to occur has a probability equal to 1 and is called
a sure event. That is,

For an impossible event M: P(M) = 0

For a sure event C: P(C) = 1

2. The sum of the probabilities of all simple events (or final

outcomes) for an experiment, denoted by ƩP (Ei), is always 1.

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Second Property of Probability For an experiment,
ƩP(Ei) = P(E1) + P(E2) + P(E3) + …… = 1

From this property, for the experiment of one toss of a coin,

P(H) + P(T) = 1

For the experiment of two tosses of a coin,

P(HH) + P(HT) + P(TH) + P(TT) = 1

For one game of football by a professional team,

P(win) = P(loss) +P(tie) = 1

9.2 Three Conceptual Approaches to Probability

The three conceptual approaches to probability are (1) classical
probability, (2) the relative frequency concept of probability, and (3) the
subjective probability concept. These three concepts are explained next.

9.2.1 Classical Probability

Many times, various outcomes for an experiment may have the same
probability of occurrence. Such outcomes are called equally likely
outcomes. The classical probability rule is applied to compute the
probabilities of events for an experiment for which all outcomes are
equally likely.

Definition
Equally Likely Outcomes Two or more outcomes (or events) that have
the same probability of occurrence are said to be equally likely outcomes
(or events).

According to the classical probability rule, the probability of a simple

event is equal to 1 divided by the total number of outcomes for the
experiment. This is obvious because the sum of the probabilities of all

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final outcomes for an experiment is 1, and all the final outcomes are
equally likely. In contrast, the probability of a compound event A is
equal to the number of outcomes favorable to event A divided by the
total number of outcomes for the experiment.

Classical Probability Rule to Find Probability

P(Ei) = 1
Total number of outcomes for the experiment

P(A) = Number of outcomes favorable to A

Total number of outcomes for the experiment

Examples illustrate how probabilities of events are calculated using the

classical probability rule.

EXAMPLE :
Find the probability of obtaining a head and the probability of obtaining
a tail for one toss of a coin.

Solution The two outcomes, head and tail, are equally likely outcomes.
Therefore,
P (head) = 1 = 1 = 0.5
Total number of outcomes 2

Similarly,
P (tail) = __1__ = 0 .50
2

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EXAMPLE:
Find the probability of obtaining an even number in one roll of a die.
Solution:
This experiment has a total of six outcomes: 1, 2, 3, 4, 5, and 6.
All these outcomes are equally likely. Let A be an event that an even
number is observed on the die. Event A includes three outcomes: 2, 4,
and 6; that is,
A = { 2, 4, 6 }

If any one of these three numbers is obtained, event A is said to occur.

Hence,
P(A) = Number of outcomes included in A = 3 = 0 .50
Total number of outcomes 6

9.2.2 Relative Frequency Concept of Probability

Suppose we want to calculate the following probabilities:
1. The probability that the next car that comes out of an auto factory is a
“lemon”
2. The probability that a randomly selected family owns a home
3. The probability that a randomly selected woman has never smoked
4. The probability that an 80-year-old person will live for at least 1 more
year
5. The probability that the tossing of an unbalanced coin will result in a
head
6. The probability that a randomly selected person owns a sport-utility
vehicle (SUV)

These probabilities cannot be computed using the classical probability

rule because the various outcomes for the corresponding experiments are
not equally likely. For example, the next car manufactured at an auto
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factory may or may not be a lemon. The two outcomes, “it is a lemon”
and “it is not a lemon,” are not equally likely. If they were, then
(approximately) half the cars manufactured by this company would be
lemons, and this might prove disastrous to the survival of the firm.

Although the various outcomes for each of these experiments are not
equally likely, each of these experiments can be performed again and
again to generate data. In such cases, to calculate probabilities, we either
use past data or generate new data by performing the experiment a large
number of times. The relative frequency of an event is used as an
approximation for the probability of that event. This method of assigning
a probability to an event is called the relative frequency concept of
probability. Because relative frequencies are determined by performing
an experiment, the probabilities calculated using relative frequencies
may change almost each time an experiment is repeated. For example,
every time a new sample of 500 cars is selected from the production line
of an auto factory, the number of lemons in those 500 cars is expected to
be different. However, the variation in the percentage of lemons will be
small if the sample size is large. Note that if we are considering the
population, the relative frequency will give an exact probability.

Using Relative Frequency as an Approximation of Probability If an

experiment is repeated n times and an event A is observed f times, then,
according to the relative frequency concept of probability,

P(A) = f
n

Examples illustrate how the probabilities of events are approximated

using the relative frequencies.

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EXAMPLE:
Ten of the 500 randomly selected cars manufactured at a certain auto
factory are found to be lemons. Assuming that the lemons are
manufactured randomly, what is the probability that the next car
manufactured at this auto factory is a lemon?

Solution:
Let n denote the total number of cars in the sample and f the number of
lemons in n. Then,
n = 500 , f = 10

Using the relative frequency concept of probability, we obtain

P(next car is a lemon) = f = 10 = 0.02

n 500

This probability is actually the relative frequency of lemons in 500 cars.

Table lists the frequency and relative frequency distributions for this
example.

The column of relative frequencies in Table is used as the column of

approximate probabilities. Thus, from the relative frequency column,
P(next car is a good car) = .2
P(next car is a lemon) = .98

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Note that relative frequencies are not exact probabilities but are
approximate probabilities unless they are based on a census.
However, if the experiment is repeated again and again, this
approximate probability of an outcome obtained from the relative
frequency will approach the actual probability of that outcome. This is
called the Law of Large Numbers.

Definition
Law of Large Numbers If an experiment is repeated again and
again, the probability of an event obtained from the relative
frequency approaches the actual or theoretical probability.

EXAMPLE:
Allison wants to determine the probability that a randomly selected
family from New York State owns a home. How can she determine this
probability?

Solution:
There are two outcomes for a randomly selected family from New York
State: “This family owns a home” and “this family does not own a
home.” These two events are not equally likely. (Note that these two
outcomes will be equally likely if exactly half of the families in New
York State own homes and exactly half do not own homes.) Hence, the
classical probability rule cannot be applied. However, we can repeat this
experiment again and again. In other words, we can select a sample of
families from New York State and observe whether or not each of them
owns a home. Hence, we will use the relative frequency approach to
probability.

Suppose Allison selects a random sample of 1000 families from New

York State and observes that 730 of them own homes and 270 do not
own homes. Then,

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 n = sample size = 1000
f = number of families who own homes = 730

Consequently,

P(a randomly selected family owns a home) = f = 730 =.730

n 1000

Again, note that .730 is just an approximation of the probability that a

randomly selected family from New York State owns a home. Every
time Allison repeats this experiment she may obtain a different
probability for this event. However, because the sample size (n = 1000)
in this example is large, the variation is expected to be very small.

9.2.3 Subjective Probability

Many times we face experiments that neither have equally likely
outcomes nor can be repeated to generate data. In such cases, we cannot
compute the probabilities of events using the classical probability rule or
the relative frequency concept. For example, consider the following
probabilities of events:

1. The probability that Carol, who is taking a statistics course, will earn
an A in the course
2. The probability that the Dow Jones Industrial Average will be higher
at the end of the next trading day
3. The probability that the New York Giants will win the Super Bowl
next season
4. The probability that Joe will lose the lawsuit he has filed against his
landlord

Neither the classical probability rule nor the relative frequency concept
of probability can be applied to calculate probabilities for these
examples. All these examples belong to experiments that have neither
equally likely outcomes nor the potential of being repeated. For
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example, Carol, who is taking statistics, will take the test (or tests) only
once, and based on that she will either earn an A or not. The two events
“she will earn an A” and “she will not earn an A” are not equally likely.
The probability assigned to an event in such cases is called subjective
Probability. It is based on the individual’s judgment, experience,
information, and belief. Carol may assign a high probability to the event
that she will earn an A in statistics, whereas her instructor may assign a
low probability to the same event.

Definition
Subjective Probability Subjective probability is the probability
assigned to an event based on subjective judgment, experience,
information, and belief.
Subjective probability is assigned arbitrarily. It is usually influenced
by the biases, preferences, and experience of the person assigning
the probability.