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Probability Distributions For Discrete Variables

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Probability Distributions For Discrete Variables

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gopaultashiana
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PROBABILITY DISTRIBUTIONS

FOR DISCRETE VARIABLES


DR. OYEYEMI OYEBOLA
BRANDON UNIVERSITY
RANDOM VARIABLE
❑ When the value that a variable assumes at the end of an experiment is the result of
a chance or random occurrence, that variable is a Random Variable (R.V.)
❑ Discrete Random Variable
– takes on finite or infinite but a countable number of different values
– E.g. values on the roll of dice: 2, 3, 4, …, 12
– “gaps” between values along the number line
– possible to list all results and the associated probabilities
❑ Continuous Random Variable
– takes on any value in an interval.
– E.g. time (20.1 minutes? 20.10000001 minutes?)
– no “gaps” between values along the number line
– cannot associate possibility with a single value, only a range of values.
❑ Analogy: Integers are Discrete, while Real Numbers are Continuous
PROBABILITY DISTRIBUTIONS
❑ A probability distribution is a table, formula, or graph
that describes the values of a random variable and the
probability associated with these values.
❑ Since we’re describing a random variable (which can be
discrete or continuous), we have two types of probability
distributions:
– Discrete Probability Distribution
– Continuous Probability Distribution
PROBABILITY NOTATION
An upper-case letter will represent the name of the random variable,
usually X.
Its lower-case counterpart will represent the value of the random
variable.
The probability that the random variable X will equal x is:
P(X = x) or more simply P(x)
EXAMPLE 1:
❑ Probability distributions can be estimated from relative frequencies.
❑ Consider the discrete (countable) number of televisions per household from US
survey data. For example, what is the probability that there is at least one television but
no more than three in any given household?

“at least one television but no more than three”


P(1 ≤ X ≤ 3) = P(1) + P(2) + P(3) = .319 + .374 + .191 = .884
P(X=4) = P(4) = 0.076 = 7.6%
POPULATION/PROBABILITY DISTRIBUTION
❑ The discrete probability distribution represents a
population
–Example 1: the population of the number of TVs
per household
❑ Since we have populations, we can describe
them by computing various parameters.
❑ For example, the population mean and population
variance.
POPULATION MEAN (EXPECTED VALUE)
❑ The population mean is the weighted average of
all of its values.
❑ The weights are the probabilities.
❑ This parameter is also called the expected value
of X and is represented by E(X).
POPULATION VARIANCE
❑ The population variance is calculated similarly. It is the weighted
average of the squared deviations from the mean.

❑ As before, there is a “short-cut” formulation…

❑ The standard deviation is the same as before:


EXAMPLE 2:
Find the mean, variance, and standard deviation for the population of the
number of colour televisions per household (from Example 1)

= 0(.012) + 1(.319) + 2(.374) + 3(.191) + 4(.076) + 5(.028)


= 2.084
EXAMPLE 2
Find the mean, variance, and standard deviation for the population of
the number of colour televisions per household (from Example 1)

= (0 – 2.084)2(.012) + (1 – 2.084)2(.319)+…+(5 – 2.084)2(.028)


= 1.107
EXAMPLE 3
An experiment consists of flipping a coin 4 times and observing the
sequence of heads and tails. The random variable X is the number
of heads in the observed sequence, and the following probability
distribution for X:

Find the expected number of heads for a trial of this experiment;


that is, find E(X).
Solution:
EXAMPLE 4
In a game of American roulette where you bet $1 on red, the probability
distribution for your earnings, denoted by X, is given by:

(a) What are your expected earnings for this bet? (What is E(X)?)

(b) How much would you expect to win/lose if you bet $1 on red 100
times?

(c) (c) What would the casino expect to earn if you bet $1 on red 100
times?
LAWS OF EXPECTED VALUE
1. E(c) = c
The expected value of a constant (c) is just the
value of the constant.
2. E(X + c) = E(X) + c
3. E(cX) = cE(X)
We can “pull” a constant out of the expected
value expression (either as part of a sum with a
random variable X or as a coefficient of random
variable X).
EXAMPLE 5
❑ Monthly sales have a mean of $25,000 and a standard deviation of
$4,000.
Profits are calculated by multiplying sales by 30% and subtracting
fixed costs of $6,000.
Find the mean monthly profit.
sales have a mean of $25,000 ➔ E(Sales) = 25,000
profits are calculated by… ➔ Profit = .30(Sales) – 6,000
E(Profit) =E[.30(Sales) – 6,000]
=E[.30(Sales)] – 6,000 [by rule #2]
=.30E(Sales) – 6,000 [by rule #3]
=.30(25,000) – 6,000 = 1,500
Thus, the mean monthly profit is $1,500
LAWS OF VARIANCE
1. V(c) = 0
The variance of a constant (c) is zero.
2. V(X + c) = V(X)
The variance of a random variable and a constant
is just the variance of the random variable (per 1
above).
3. V(cX) = c2V(X)
The variance of a random variable and a constant
coefficient is the coefficient squared times the
variance of the random variable.
EXAMPLE 5
Monthly sales have a mean of $25,000 and a standard deviation of $4,000.
Profits are calculated by multiplying sales by 30% and subtracting fixed
costs of $6,000.
Find the standard deviation of monthly profits.
The variance of profit is = V(Profit)
=V[.30(Sales) – 6,000]
=V[.30(Sales)] [by rule #2]
=(.30)2V(Sales) [by rule #3]
=(.30)2(16,000,000) = 1,440,000
Again, the standard deviation is the square root of the variance, so the
standard deviation of
Sdev(Profit) = (1,440,000)1/2 = $1,200

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