Tshwane University of Technology

Business Statistics (BUS 501T)

Lesson 3

The probability of event A is the number of ways event A can occur divided by the
total number of possible outcomes.

N ( A)
P( A) = where
N (S )

N(A) = Number of outcomes favourable to event A

N(S) = Total number of outcomes

The probability of an event is the measure of the chance that the event will occur
as a result of an experiment. The probability of an event A is the number of ways
event A can occur divided by the total number of possible outcomes. The
probability of an event A, symbolized by P(A), is a number between 0 and 1,
inclusive, that measures the likelihood of an event in the following way:

If P(A) > P(B) then event A is more likely to occur than event B.

If P(A) = P(B) then events A and B are equally likely to occur.

The probability of an impossible event is 0.

The probability of a sure event is 1.

0 ≤ P ( A) ≤ 1

The complement of an event A is the set of all outcomes in the sample space that are not
included in the outcomes of event A. The complement of event A is represented by .

P( ) = 1 - P(A)

Experiment 1: A spinner with 4 possible colours (yellow, green, red and

blue)

Experiment 1: A spinner has 4 equal sectors coloured yellow, blue,

green and red. After spinning the spinner, what is the
probability of landing on each colour?

Outcomes: The possible outcomes of this experiment are yellow,

blue, green, and red.

N (Yellow) 1
P(Yellow) = =
4 4

1
 N ( Blue) 1
P(Blue) = =
4 4

N (Green) 1
P(Green) = =
4 4

N (Re d ) 1
P(Red) = =
4 4

Experiment 2: A die with 6 possible faces (1, 2, 3, 4, 5 and 6)

Experiment 2: A single 6-sided die is rolled.

What is the probability of
rolling an even number?

Outcomes: The possible outcomes of this

experiment are 1, 2, 3, 4, 5
and 6.

N ( Even Numbers) 3
P(Even number) = = = 0.50
6 6

The Venn diagram

The venn diagram is made up of two or more overlapping circles. It is often used
in mathematics to show relationships between sets. In language arts instruction,
Venn Diagrams are useful for examining similarities and differences in
characters, stories, poems, etc. It is frequently used as a prewriting activity to
enable students to organize thoughts or textual quotations prior to writing a
compare/contrast essay. This activity enables students to organize similarities
and differences visually.

The venn diagram shown below illustrates the relationship expressed in 2

overlapping circles. The two overlapping circles represent 3 distinct areas. These
3 areas represent 3 probabilities P(A), P(B), and P(A and B). In the venn
diagram, the probability of event A is denoted by A. The probability of event B is
denoted by B. The probability of events A and B is denoted by C.

2
Definition of independent events:
Two events, A and B, are independent if the fact that A occurs does not affect the
probability of B occurring.

Examples of independent events are:

• Landing on heads after tossing a coin AND rolling a 5 on a single 6-sided

die.
• Choosing a marble from a jar AND landing on heads after tossing a coin.
• Choosing a 3 from a deck of cards, replacing it, AND then choosing an ace
as the second card.
• Rolling a 4 on a single 6-sided die, AND then rolling a 1 on a second roll of
the die.

When 2 events, A and B, are independent, the probability of both events

occurring is given by:

P(A and B) = P(A I B) = P(A).P(B|A)

The conditional probability of an event B in relationship to an event A is the

probability that event B occurs given that event A has already occurred. The
notation for conditional probability is P(B|A),

P( A I B)
P(B|A) =
P( A)

A math teacher gave her class two tests. 25% of the class passed both tests and
42% of the class passed the first test. What percent of those who passed the first
test also passed the second test?

P ( first and sec ond ) 0.25

P(sec ond | first ) = = = 0.60 = 60%
P ( first ) 0.42

3
A jar contains black and white marbles. Two marbles are chosen without
replacement. The probability of selecting a black marble and a white marble is
0.34, and the probability of selecting a black marble on the first draw is 0.47.
What is the probability of selecting a white marble on the second draw, given that
the first marble drawn was black?

P(black and white) 0.34

P( white | black ) = = = 0.72 = 72%
P(black ) 0.47

The probability that it is Friday and that a student is absent is 0.03. Since there
are 5 school days in a week, the probability that it is Friday is 0.2. What is the
probability that a student is absent given that today is Friday?

P ( Friday and absent ) 0.03

P ( Absent | Friday ) = = = 0.15 = 15%
P ( Friday ) 0.20

Conditional probability

Let A and B denote 2 events with P(B) > 0. The probability that event A occurs
given that event B has occurred is given by:

P( A I B)
P( A | B) = or P( A I B) = P( A | B) P( B)
P( B)

Likewise, for event A such that P(A) > 0, the probability that event B occurs
given that event A has occurred is given by:

P( A I B)
P( B | A) = or P ( A I B ) = P ( B | A) P ( A)
P( A)

Hence, P ( A I B ) = P ( A | B ) P ( B ) = P ( B | A) P ( A)

Remark: If A and B are independent events, P ( A I B ) = P ( A) P ( B )

If A and B are independent, P(A|B) = P(A) and P(B|A) = P(B)

Example: A vaccination box contains 12 vials out of which 3 are defective. If 2

vials are selected at random from the box one after another, what is the
probability that both vials are defective?

Let A denote the event that the first vial is defective.

Let B denote the event that the second vial is defective.

3 2 1
P ( A I B ) = P ( A) P ( B | A) = × =
12 11 22

4
The total probability theorem

P( A) = P ( A | B1 ) P( B1 ) + P( A | B2 ) P( B2 ) + ...... + P( A | Bn ) P ( Bn )

n
= ∑ P( A | B ) P( B )
i =1
i i

Bayes theorem

P( B | A) P( A)
P( A | B) = n

∑ P( B | A ) P( A )
i =1
i i

Example

A certain company has 3 engineers A, B and C. Each day on average,

engineers A, B and C assemble 37%, 42% and 21% of machines sold by the
company to customers respectively. It is known that 0.6% of all machines
assembled by engineer A are faulty. The corresponding figures for engineers
B and C are 0.4% and 1.2% respectively.

a) What is the probability that a machine sold by the company is faulty?

b) What is the probability that a machine assembled by engineer A is

faulty?

Let A denote the event that a machine sold by the company is faulty.
Let B1 denote the proportion of machines assembled by engineer A
Let B2 denote the proportion of machines assembled by engineer B
Let B3 denote the proportion of machines assembled by engineer C

P ( A | B1 ) = the probability that a machine assembled by engineer A is faulty

P( A | B2 ) = the probability that a machine assembled by engineer B is faulty

P( A | B3 ) = the probability that a machine assembled by engineer C is faulty

P( B1 ) = 0.37
P( B2 ) = 0.42
P( B3 ) = 0.21

P( A | B1 ) = 0.006

5
P( A | B2 ) = 0.004

P( A | B3 ) = 0.012

a) P( A) = P ( A | B1 ) P( B1 ) + P( A | B2 ) P ( B2 ) + P( A | B3 ) P( B3 )
= (0.006)(0.37) + (0.004)(0.42) + (0.012)(0.21)
= 0.0022 + 0.0017 + 0.0025
= 0.0064

P( A | B1 ) P( B1 ) 0.0022
b) P( B1 | A) = = = 0.3438 = 34.38%
P( A) 0.0064

Probability distributions

In business related studies, certain probability distributions are crucially

important for statistical analyses. The most commonly used probability
distributions are the Bernoulli distribution, the binomial distribution, the normal
distribution, the Poisson distribution, the Student’s t-distribution.

The Bernoulli distribution

When a coin is flipped, the outcome is either a head or a tail; when a magician
guesses the card selected from a deck, the magician can either be correct or
incorrect; when a baby is born, the baby is either born in the month of March
or is not. In each of these examples, an event has two mutually exclusive
possible outcomes. For convenience, one of the outcomes can be labelled
"success" and the other outcome "failure." A probability distribution that has
only 2 possible outcomes (success or failure) is called the Bernoulli
distribution.

P(X=x) = p x (1 − p )1− x where x=1 for a success, and x=0 for a failure

The binomial probability distribution

The binomial probability distribution arises from the Bernoulli probability

distribution. The sum of n independently and identically distributed Bernoulli
random variables follows the binomial probability distribution.

A random variable X is said to have the Bernoulli probability distribution if its

probability distribution is given by:

6
P( X = x ) = p x (1 − p )1− x where x = 0, 1

X is a discrete random variable that can only have one of 2 possible values.
Either the event occurs, or fails to occur.

1 if the event occurs

x=
0 otherwise

p = probability of success

1-p = probability of failure = q

The expected value of X is equal to p

The variance of X is equal to p(1-p) = pq

Example: Suppose that a fair coin is tossed once, and the face up is noted.

1 if a Head occurs
x=
0 otherwise

What is the probability that a Head appears?

Required: The probability that a Head appears = P(X=1)

P( X = x ) = p x (1 − p )1− x where x = 0, 1

P( X = 1) = p 1 (1 − p )1−1 = p (1 − p ) 0 = p

The binomial random variable

A random variable X is said to have the binomial probability distribution if its

probability distribution is given by:

n
P( X = x ) =   p x (1 − p ) n − x where x = 0, 1, ….., n
 x

X is a discrete random variable.

n = total number of trials = sample size

x = number of successes in the experiments

p = probability of success

7
1-p = probability of failure = q

The expected value of X is equal to np

The variance of X is equal to np(1-p) = npq

Example

According to the South African Chamber of Commerce, the proportion of

small businesses who default on their bank loans is known to be 30%. A
random sample of 10 small businesses is examined by a researcher working
for the South African Chamber of Commerce. Assuming that the distribution of
small businesses is independent,

a) What is the probability that exactly 3 of the 10 small businesses have

defaulted on their loan?
b) What is the probability that at least 5 of the 10 small businesses have
defaulted on their loan?
c) What is the probability that between 4 and 6 businesses have defaulted
on their loan?
d) What is the expected value of small businesses defaulting on their
loans?
e) What is the standard error of estimation?

Solution

n = 10

p = 30% = 0.3 = probability of success

1-p = 70% = 0.70 = probability of failure

10 
a) P( X = 3) =  (0.3)3 (0.7) 7
3 

10
10 
b) P( X ≥ 5) = ∑  (0.3) x (0.7)10 − x = P(X=5) + P(X=6) + ….. + P(X=10)
x =5  x 

where

10 
P( X = 5) =  (0.3)5 (0.7) 5
5 

8
 10 
P( X = 6 ) =  (0.3) 6 (0.7) 4
6 

10 
P ( X = 7 ) =  (0.3) 7 (0.7) 3
7 

10 
P ( X = 8) =  (0.3)8 (0.7) 2
8 

10 
P ( X = 9 ) =  (0.3)9 (0.7)1
9 

10 
P ( X = 10 ) =  (0.3)10 (0.7) 0
10 

6
10 
c) P (4 ≤ X ≥ 6 ) = ∑  (0.3) x (0.7)10 − x
x=4  x 

d) E(X) = np = 10(0.3) = 3 = Expected value of X

e) V(X) = np(1-p) = 10(0.3)(0.7) = 2.1 = Variance of X

Std.Dev(X) = 2. 1

S 2.1
Std.Err(X) = =
n 10

The Poisson distribution

A random variable X has a Poisson distribution with parameter λ if the

probability density function is given by

e −λ λ x
P( X = x ) = where x = 0, 1, 2, ….. and λ > 0.
x!

The mean and variance of the Poisson random variable are both equal to λ .

9
E( X ) = λ
V (X ) = λ

The Poisson distribution is used to estimate the probability of rare events.

Example: the number of businesses filing for bankruptcy protection, the

number of people committing suicide in a day, the number of traffic accidents
occurring on a stretch of road per day, etc.

Example

It is known that the N3 experiences an average of 6 major road accidents

each day. What is the probability that 4 major road accidents occur on any
given day?

e −6 6 x e −6 6 4 (0.0025)(1296)
P ( X = 4) = = = = 0.135 = 13.5%
x! 4! 24

The binomial table

n
P ( X = x ) =   p x (1 − p ) n− x where x = 0, 1, 2, ….., n
 x

• The following table lists the probability of attaining x successes out of n

trials, where the probability of success in any one trial is p

• To find the probability of obtaining x or more successes in n trials, add

the probabilities corresponding to x, x+1, x+2, ... together. For example,
the probability of obtaining 1 or more heads in two coin flips is 0.500 +
0.250 = 0.750

• If p is greater than 0.5, then use 1-p as the probability and n-x as the
desired number of successes (i.e. look up the probability of obtaining n-
x failures rather than x successes).

The binomial table is shown below:

10
 p

n x .01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50

2 0 .980 .960 .922 .903 .884 .846 .810 .774 .740 .723 .706 .672 .640 .608 .578 .563 .490 .423 .360 .303 .250
2 1 .020 .039 .077 .095 .113 .147 .180 .211 .241 .255 .269 .295 .320 .343 .365 .375 .420 .455 .480 .495 .500
2 2 .002 .003 .004 .006 .010 .014 .020 .023 .026 .032 .040 .048 .058 .063 .090 .123 .160 .203 .250

3 0 .970 .941 .885 .857 .831 .779 .729 .681 .636 .614 .593 .551 .512 .475 .439 .422 .343 .275 .216 .166 .125
3 1 .029 .058 .111 .135 .159 .203 .243 .279 .311 .325 .339 .363 .384 .402 .416 .422 .441 .444 .432 .408 .375
3 2 .001 .005 .007 .010 .018 .027 .038 .051 .057 .065 .080 .096 .113 .131 .141 .189 .239 .288 .334 .375
3 3 .001 .001 .002 .003 .003 .004 .006 .008 .011 .014 .016 .027 .043 .064 .091 .125

4 0 .961 .922 .849 .815 .781 .716 .656 .600 .547 .522 .498 .452 .410 .370 .334 .316 .240 .179 .130 .092 .063
4 1 .039 .075 .142 .171 .199 .249 .292 .327 .356 .368 .379 .397 .410 .418 .421 .422 .412 .384 .346 .299 .250
4 2 .001 .002 .009 .014 .019 .033 .049 .067 .087 .098 .108 .131 .154 .177 .200 .211 .265 .311 .346 .368 .375
4 3 .001 .002 .004 .006 .009 .011 .014 .019 .026 .033 .042 .047 .076 .111 .154 .200 .250
4 4 .001 .001 .001 .002 .002 .003 .004 .008 .015 .026 .041 .063

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50
5 0 .951 .904 .815 .774 .734 .659 .590 .528 .470 .444 .418 .371 .328 .289 .254 .237 .168 .116 .078 .050 .031
5 1 .048 .092 .170 .204 .234 .287 .328 .360 .383 .392 .398 .407 .410 .407 .400 .396 .360 .312 .259 .206 .156
5 2 .001 .004 .014 .021 .030 .050 .073 .098 .125 .138 .152 .179 .205 .230 .253 .264 .309 .336 .346 .337 .313
5 3 .001 .001 .002 .004 .008 .013 .020 .024 .029 .039 .051 .065 .080 .088 .132 .181 .230 .276 .313
5 4 .001 .002 .002 .003 .004 .006 .009 .013 .015 .028 .049 .077 .113 .156
5 5 .001 .001 .001 .002 .005 .010 .018 .031

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50
6 0 .941 .886 .783 .735 .690 .606 .531 .464 .405 .377 .351 .304 .262 .225 .193 .178 .118 .075 .047 .028 .016
6 1 .057 .108 .196 .232 .264 .316 .354 .380 .395 .399 .401 .400 .393 .381 .365 .356 .303 .244 .187 .136 .094
6 2 .001 .006 .020 .031 .042 .069 .098 .130 .161 .176 .191 .220 .246 .269 .288 .297 .324 .328 .311 .278 .234
6 3 .001 .002 .004 .008 .015 .024 .035 .041 .049 .064 .082 .101 .121 .132 .185 .235 .276 .303 .313
6 4 .001 .001 .002 .004 .005 .007 .011 .015 .021 .029 .033 .060 .095 .138 .186 .234
6 5 .001 .001 .002 .002 .004 .004 .010 .020 .037 .061 .094
6 6 .001 .002 .004 .008 .016

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50
7 0 .932 .868 .751 .698 .648 .558 .478 .409 .348 .321 .295 .249 .210 .176 .146 .133 .082 .049 .028 .015 .008
7 1 .066 .124 .219 .257 .290 .340 .372 .390 .396 .396 .393 .383 .367 .347 .324 .311 .247 .185 .131 .087 .055
7 2 .002 .008 .027 .041 .055 .089 .124 .160 .194 .210 .225 .252 .275 .293 .307 .311 .318 .298 .261 .214 .164
7 3 .002 .004 .006 .013 .023 .036 .053 .062 .071 .092 .115 .138 .161 .173 .227 .268 .290 .292 .273
7 4 .001 .003 .005 .009 .011 .014 .020 .029 .039 .051 .058 .097 .144 .194 .239 .273
7 5 .001 .001 .002 .003 .004 .007 .010 .012 .025 .047 .077 .117 .164
7 6 .001 .001 .001 .004 .008 .017 .032 .055
7 7 .001 .002 .004 .008

11
 .01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50
8 0 .923 .851 .721 .663 .610 .513 .430 .360 .299 .272 .248 .204 .168 .137 .111 .100 .058 .032 .017 .008 .004
8 1 .075 .139 .240 .279 .311 .357 .383 .392 .390 .385 .378 .359 .336 .309 .281 .267 .198 .137 .090 .055 .031
8 2 .003 .010 .035 .051 .070 .109 .149 .187 .222 .238 .252 .276 .294 .305 .311 .311 .296 .259 .209 .157 .109
8 3 .003 .005 .009 .019 .033 .051 .072 .084 .096 .121 .147 .172 .196 .208 .254 .279 .279 .257 .219
8 4 .001 .002 .005 .009 .015 .018 .023 .033 .046 .061 .077 .087 .136 .188 .232 .263 .273
8 5 .001 .002 .003 .003 .006 .009 .014 .020 .023 .047 .081 .124 .172 .219
8 6 .001 .001 .002 .003 .004 .010 .022 .041 .070 .109
8 7 .001 .003 .008 .016 .031
8 8 .001 .002 .004

9 0 .914 .834 .693 .630 .573 .472 .387 .316 .257 .232 .208 .168 .134 .107 .085 .075 .040 .021 .010 .005 .002
9 1 .083 .153 .260 .299 .329 .370 .387 .388 .377 .368 .357 .331 .302 .271 .240 .225 .156 .100 .060 .034 .018
9 2 .003 .013 .043 .063 .084 .129 .172 .212 .245 .260 .272 .291 .302 .306 .304 .300 .267 .216 .161 .111 .070
9 3 .001 .004 .008 .013 .026 .045 .067 .093 .107 .121 .149 .176 .201 .224 .234 .267 .272 .251 .212 .164
9 4 .001 .001 .003 .007 .014 .023 .028 .035 .049 .066 .085 .106 .117 .172 .219 .251 .260 .246
9 5 .001 .002 .004 .005 .007 .011 .017 .024 .033 .039 .074 .118 .167 .213 .246
9 6 .001 .001 .002 .003 .005 .007 .009 .021 .042 .074 .116 .164
9 7 .001 .001 .001 .004 .010 .021 .041 .070
9 8 .001 .004 .008 .018
9 9 .001 .002

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50

10 0 .904 .817 .665 .599 .539 .434 .349 .279 .221 .197 .175 .137 .107 .083 .064 .056 .028 .013 .006 .003 .001
10 1 .091 .167 .277 .315 .344 .378 .387 .380 .360 .347 .333 .302 .268 .235 .203 .188 .121 .072 .040 .021 .010
10 2 .004 .015 .052 .075 .099 .148 .194 .233 .264 .276 .286 .298 .302 .298 .288 .282 .233 .176 .121 .076 .044
10 3 .001 .006 .010 .017 .034 .057 .085 .115 .130 .145 .174 .201 .224 .243 .250 .267 .252 .215 .166 .117
10 4 .001 .002 .005 .011 .020 .033 .040 .048 .067 .088 .111 .134 .146 .200 .238 .251 .238 .205
10 5 .001 .001 .003 .006 .008 .011 .018 .026 .037 .051 .058 .103 .154 .201 .234 .246
10 6 .001 .001 .002 .003 .006 .009 .013 .016 .037 .069 .111 .160 .205
10 7 .001 .001 .002 .003 .009 .021 .042 .075 .117
10 8 .001 .004 .011 .023 .044
10 9 .001 .002 .004 .010
10 10 .001

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50
11 0 .895 .801 .638 .569 .506 .400 .314 .245 .190 .167 .147 .113 .086 .065 .049 .042 .020 .009 .004 .001
11 1 .099 .180 .293 .329 .355 .382 .384 .368 .341 .325 .308 .272 .236 .202 .170 .155 .093 .052 .027 .013 .005
11 2 .005 .018 .061 .087 .113 .166 .213 .251 .277 .287 .293 .299 .295 .284 .268 .258 .200 .140 .089 .051 .027
11 3 .001 .008 .014 .022 .043 .071 .103 .135 .152 .168 .197 .221 .241 .254 .258 .257 .225 .177 .126 .081
11 4 .001 .001 .003 .008 .016 .028 .044 .054 .064 .086 .111 .136 .160 .172 .220 .243 .236 .206 .161
11 5 .001 .002 .005 .010 .013 .017 .027 .039 .054 .071 .080 .132 .183 .221 .236 .226
11 6 .001 .002 .002 .003 .006 .010 .015 .022 .027 .057 .099 .147 .193 .226
11 7 .001 .002 .003 .005 .006 .017 .038 .070 .113 .161
11 8 .001 .001 .004 .010 .023 .046 .081
11 9 .001 .002 .005 .013 .027

12
11 10 .001 .002 .005
11 11

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50
12 0 .886 .785 .613 .540 .476 .368 .282 .216 .164 .142 .123 .092 .069 .051 .037 .032 .014 .006 .002 .001
12 1 .107 .192 .306 .341 .365 .384 .377 .353 .320 .301 .282 .243 .206 .172 .141 .127 .071 .037 .017 .008 .003
12 2 .006 .022 .070 .099 .128 .183 .230 .265 .286 .292 .296 .294 .283 .266 .244 .232 .168 .109 .064 .034 .016
12 3 .001 .010 .017 .027 .053 .085 .120 .155 .172 .188 .215 .236 .250 .257 .258 .240 .195 .142 .092 .054
12 4 .001 .002 .004 .010 .021 .037 .057 .068 .080 .106 .133 .159 .183 .194 .231 .237 .213 .170 .121
12 5 .001 .004 .008 .015 .019 .025 .037 .053 .072 .092 .103 .158 .204 .227 .222 .193
12 6 .001 .003 .004 .005 .010 .016 .024 .034 .040 .079 .128 .177 .212 .226
12 7 .001 .001 .002 .003 .006 .009 .011 .029 .059 .101 .149 .193
12 8 .001 .001 .002 .002 .008 .020 .042 .076 .121
12 9 .001 .005 .012 .028 .054
12 10 .001 .002 .007 .016
12 11 .001 .003
12 12

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50

13 0 .878 .769 .588 .513 .447 .338 .254 .190 .141 .121 .104 .076 .055 .040 .028 .024 .010 .004 .001
13 1 .115 .204 .319 .351 .371 .382 .367 .336 .298 .277 .257 .216 .179 .145 .116 .103 .054 .026 .011 .004 .002
13 2 .007 .025 .080 .111 .142 .199 .245 .275 .291 .294 .293 .285 .268 .245 .220 .206 .139 .084 .045 .022 .010
13 3 .002 .012 .021 .033 .064 .100 .138 .174 .190 .205 .229 .246 .254 .254 .252 .218 .165 .111 .066 .035
13 4 .001 .003 .005 .014 .028 .047 .071 .084 .098 .126 .154 .179 .201 .210 .234 .222 .184 .135 .087
13 5 .001 .002 .006 .012 .021 .027 .033 .050 .069 .091 .114 .126 .180 .215 .221 .199 .157
13 6 .001 .002 .004 .006 .008 .015 .023 .034 .048 .056 .103 .155 .197 .217 .209
13 7 .001 .001 .002 .003 .006 .010 .015 .019 .044 .083 .131 .177 .209
13 8 .001 .001 .002 .004 .005 .014 .034 .066 .109 .157
13 9 .001 .001 .003 .010 .024 .050 .087
13 10 .001 .002 .006 .016 .035
13 11 .001 .004 .010
13 12 .002
13 13

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50

14 0 .869 .754 .565 .488 .421 .311 .229 .167 .121 .103 .087 .062 .044 .031 .021 .018 .007 .002 .001
14 1 .123 .215 .329 .359 .376 .379 .356 .319 .276 .254 .232 .191 .154 .122 .095 .083 .041 .018 .007 .003 .001
14 2 .008 .029 .089 .123 .156 .214 .257 .283 .292 .291 .287 .272 .250 .223 .195 .180 .113 .063 .032 .014 .006
14 3 .002 .015 .026 .040 .074 .114 .154 .190 .206 .219 .239 .250 .252 .246 .240 .194 .137 .085 .046 .022
14 4 .002 .004 .007 .018 .035 .058 .085 .100 .115 .144 .172 .195 .214 .220 .229 .202 .155 .104 .061
14 5 .001 .003 .008 .016 .028 .035 .044 .063 .086 .110 .135 .147 .196 .218 .207 .170 .122
14 6 .001 .003 .007 .009 .012 .021 .032 .047 .064 .073 .126 .176 .207 .209 .183
14 7 .001 .001 .002 .003 .005 .009 .015 .023 .028 .062 .108 .157 .195 .209
14 8 .001 .002 .004 .006 .008 .023 .051 .092 .140 .183
14 9 .001 .001 .002 .007 .018 .041 .076 .122

13
14 10 .001 .005 .014 .031 .061
14 11 .001 .003 .009 .022
14 12 .001 .002 .006
14 13 .001
14 14

.01 .02 .04 .05 .06 .08 .10 .12 .14 .15 .16 .18 .20 .22 .24 .25 .30 .35 .40 .45 .50

15 0 .860 .739 .542 .463 .395 .286 .206 .147 .104 .087 .073 .051 .035 .024 .016 .013 .005 .002
15 1 .130 .226 .339 .366 .378 .373 .343 .301 .254 .231 .209 .168 .132 .102 .077 .067 .031 .013 .005 .002
15 2 .009 .032 .099 .135 .169 .227 .267 .287 .290 .286 .279 .258 .231 .201 .171 .156 .092 .048 .022 .009 .003
15 3 .003 .018 .031 .047 .086 .129 .170 .204 .218 .230 .245 .250 .246 .234 .225 .170 .111 .063 .032 .014
15 4 .002 .005 .009 .022 .043 .069 .100 .116 .131 .162 .188 .208 .221 .225 .219 .179 .127 .078 .042
15 5 .001 .001 .004 .010 .021 .036 .045 .055 .078 .103 .129 .154 .165 .206 .212 .186 .140 .092
15 6 .001 .002 .005 .010 .013 .017 .029 .043 .061 .081 .092 .147 .191 .207 .191 .153
15 7 .001 .002 .003 .004 .008 .014 .022 .033 .039 .081 .132 .177 .201 .196
15 8 .001 .001 .002 .003 .006 .010 .013 .035 .071 .118 .165 .196
15 9 .001 .001 .003 .003 .012 .030 .061 .105 .153
15 10 .001 .003 .010 .024 .051 .092
15 11 .001 .002 .007 .019 .042
15 12 .002 .005 .014
15 13 .001 .003
15 14
15 15

The Poisson table

e −λ λ x
P( X = x) = where x = 0, 1, 2, ….
x!

The likeliest number of occurrences (which is λ , rounded down to the

nearest whole number) is shown in bold. For any whole number λ , P( λ ) =
P( λ -1).

For values of λ > 20, the Poisson distribution is approximated by the normal
distribution.

14
 The Poisson table for small values of λ

λ 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

P(X=0) 0.9048 0.8187 0.7408 0.6703 0.6065 0.5488 0.4966 0.4493 0.4066
P(X=1) 0.0905 0.1637 0.2222 0.2681 0.3033 0.3293 0.3476 0.3595 0.3659
P(X=2) 0.0045 0.0164 0.0333 0.0536 0.0758 0.0988 0.1217 0.1438 0.1647
P(X=3) 0.0002 0.0011 0.0033 0.0072 0.0126 0.0198 0.0284 0.0383 0.0494
P(X=4) 0.0001 0.0003 0.0007 0.0016 0.0030 0.0050 0.0077 0.0111

P(X=5) 0.0001 0.0002 0.0004 0.0007 0.0012 0.0020

P(X=6) 0.0001 0.0002 0.0003

The Poisson table for moderate values of λ

λ 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

P(X=0) 0.3679 0.2231 0.1353 0.0821 0.0498 0.0302 0.0183 0.0111 0.0067
P(X=1) 0.3679 0.3347 0.2707 0.2052 0.1494 0.1057 0.0733 0.0500 0.0337
P(X=2) 0.1839 0.2510 0.2707 0.2565 0.2240 0.1850 0.1465 0.1125 0.0842
P(X=3) 0.0613 0.1255 0.1804 0.2138 0.2240 0.2158 0.1954 0.1687 0.1404
P(X=4) 0.0153 0.0471 0.0902 0.1336 0.1680 0.1888 0.1954 0.1898 0.1755
P(X=5) 0.0031 0.0141 0.0361 0.0668 0.1008 0.1322 0.1563 0.1708 0.1755
P(X=6) 0.0005 0.0035 0.0120 0.0278 0.0504 0.0771 0.1042 0.1281 0.1462
P(X=7) 0.0001 0.0008 0.0034 0.0099 0.0216 0.0385 0.0595 0.0824 0.1044
P(X=8) 0.0001 0.0009 0.0031 0.0081 0.0169 0.0298 0.0463 0.0653

P(X=9) 0.0002 0.0009 0.0027 0.0066 0.0132 0.0232 0.0363

P(X=10) 0.0002 0.0008 0.0023 0.0053 0.0104 0.0181

P(X=11) 0.0002 0.0007 0.0019 0.0043 0.0082

P(X=12) 0.0001 0.0002 0.0006 0.0016 0.0034

P(X=13) 0.0001 0.0002 0.0006 0.0013

P(X=14) 0.0001 0.0002 0.0005

P(X=15) 0.0001 0.0002

15
 The Poisson table for large values of λ

λ 5 6 7 8 9 10 15 20
P(X=0) 0.0067 0.0025 0.0009 0.0003 0.0001 0.0000 0.0000 0.0000
P(X=1) 0.0337 0.0149 0.0064 0.0027 0.0011 0.0005 0.0000 0.0000
P(X=2) 0.0842 0.0446 0.0223 0.0107 0.0050 0.0023 0.0000 0.0000
P(X=3) 0.1404 0.0892 0.0521 0.0286 0.0150 0.0076 0.0002 0.0000
P(X=4) 0.1755 0.1339 0.0912 0.0573 0.0337 0.0189 0.0006 0.0000
P(X=5) 0.1755 0.1606 0.1277 0.0916 0.0607 0.0378 0.0019 0.0001
P(X=6) 0.1462 0.1606 0.1490 0.1221 0.0911 0.0631 0.0048 0.0002
P(X=7) 0.1044 0.1377 0.1490 0.1396 0.1171 0.0901 0.0104 0.0005
P(X=8) 0.0653 0.1033 0.1304 0.1396 0.1318 0.1126 0.0194 0.0013
P(X=9) 0.0363 0.0688 0.1014 0.1241 0.1318 0.1251 0.0324 0.0029
P(X=10) 0.0181 0.0413 0.0710 0.0993 0.1186 0.1251 0.0486 0.0058
P(X=11) 0.0082 0.0225 0.0452 0.0722 0.0970 0.1137 0.0663 0.0106
P(X=12) 0.0034 0.0113 0.0264 0.0481 0.0728 0.0948 0.0829 0.0176
P(X=13) 0.0013 0.0052 0.0142 0.0296 0.0504 0.0729 0.0956 0.0271
P(X=14) 0.0005 0.0022 0.0071 0.0169 0.0324 0.0521 0.1024 0.0387
P(X=15) 0.0002 0.0009 0.0033 0.0090 0.0194 0.0347 0.1024 0.0516
P(X=16) 0.0003 0.0014 0.0045 0.0109 0.0217 0.0960 0.0646

P(X=17) 0.0001 0.0006 0.0021 0.0058 0.0128 0.0847 0.0760

P(X=18) 0.0002 0.0009 0.0029 0.0071 0.0706 0.0844

P(X=19) 0.0001 0.0004 0.0014 0.0037 0.0557 0.0888

P(X=20) 0.0002 0.0006 0.0019 0.0418 0.0888

P(X=21) 0.0001 0.0003 0.0009 0.0299 0.0846

P(X=22) 0.0001 0.0004 0.0204 0.0769

P(X=23) 0.0002 0.0133 0.0669

P(X=24) 0.0001 0.0083 0.0557

P(X=25) 0.0050 0.0446

P(X=26) 0.0029 0.0343

P(X=27) 0.0016 0.0254

P(X=28) 0.0009 0.0181

P(X=29) 0.0004 0.0125

P(X=30) 0.0002 0.0083

P(X=31) 0.0001 0.0054

16
P(X=32) 0.0001 0.0034

P(X=33) 0.0020

P(X=34) 0.0012

P(X=35) 0.0007

P(X=36) 0.0004

P(X=37) 0.0002

P(X=38) 0.0001

P(X=39) 0.0001

17
The standard normal distribution and applications

Normal distributions are a family of distributions that have the shape shown
below.

Normal distributions are symmetric with scores more concentrated in the middle than in
the tails. They are defined by two parameters: the mean (µ) and the standard deviation
(σ). Many kinds of behavioural data are approximated well by the normal distribution.
Many statistical tests assume a normal distribution. Most of these tests work well even if
the distribution is only approximately normal and in many cases as long as it does not
deviate greatly from normality.

The formula for the height (y) of a normal curve for a given value of x is:

Definition of the normal probability distribution

A random variable X is said to have a normal distribution with mean µ and

2
variance σ if its probability density function is given by:

 1  x − µ 2 
exp −  
 2  σ  
(
f x; µ , σ 2 ) =   where − ∞ < X < +∞
2π σ

E( X ) = µ (the true mean or average value of the distribution)

V (X ) = σ 2 (the true variance of the distribution)

Definition of the standard normal random variable Z

Let X be a random variable distributed normally with mean µ and variance

σ 2 . The standard normal random variable Z is a function of X, and is defined
as follows:

18
 X −µ X −µ
Z= = ~ N (0, 1)
σ σ/ n

Areas under the standard normal curve

The total area under the standard normal curve is 1.

The area to the left of 0 under the standard normal curve is 0.5.

The area to the right of 0 under the standard normal curve is 0.5.

The area that lies under the standard normal curve is symmetrical with

respect to the Y-axis.

Example: Suppose that test scores in an exam are normally distributed with a
mean of 60 and a standard deviation of 10. What is the proportion of scores
that are above 85? This problem is very similar to figuring out the percentile
rank of a person scoring 85. The first step is to figure out the proportion of
scores less than or equal to 85. This is done by figuring out how many
standard deviations above the mean 85 is. Since 85 is 85-60 = 25 points
above the mean and since the standard deviation is 10, a score of 85 is 25/10
= 2.5 standard deviations above the mean. Or, in terms of the formula,

A Z-table can be used to calculate that 0.9938 of the scores are less than or
equal to a score 2.5 standard deviations above the mean. It follows that only 1
- 0.9938 = 0.0062 of the scores are above a score 2.5 standard deviations
above the mean. Therefore, only 0.0062 = 0.62% of the scores are above 85.

The Z-table (The standard normal table)

The Z-table shows the area that lies under the standard normal curve
between 0 and a positive number Z that lies to the right of 0.

The area that lies under the standard normal curve is symmetrical. The area
to the left of 0 is 0.5. The area to the right of 0 is also equal to 0.5. These 2

19
properties can be used to determine any area that lies under the standard
normal curve between any two points a and b.

Areas under the standard normal curve between 0 and Z

Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359

0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753

0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141

0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517

0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879

0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224

0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549

0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852

0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133

0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389

1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621

1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830

1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015

1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177

1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319

1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441

1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545

1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633

1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706

1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767

2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817

2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857

2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890

2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916

2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936

20
2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952

2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964

2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974

2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981

2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986

3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990

3.1 0.4990 0.4991 0.4991 0.4991 0.4992 0.4992 0.4992 0.4992 0.4993 0.4993

3.2 0.4993 0.4993 0.4994 0.4994 0.4994 0.4994 0.4994 0.4995 0.4995 0.4995

3.3 0.4995 0.4995 0.4995 0.4996 0.4996 0.4996 0.4996 0.4996 0.4996 0.4997

3.4 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4998

3.5 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998

3.6 0.4998 0.4998 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999

3.7 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999

3.8 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999 0.4999

Example 1:

How large is the area that lies under the standard normal curve to the left of

1.53?

Look for 1.5 in the X column, go right to the 0.03 column to find the value

0.43699. Now add 0.5 (for the probability less than zero) to obtain the final

result of 0.93699.

Example 2:

How large is the area that lies under the standard normal curve to the left of –

1.53?

21
By symmetry, the area to the left of –1.53 is equal to the area to the right of

1.53.

P( X ≤ a ) = 1 − P( X ≤ | a | ) for X ≤0

From Example 1 above, the area to the left of –1.53 is equal to 1 - 0.93699 =
0.06301.

Example 3:

How large is the area that lies under the standard normal curve between the

numbers –1.00 and 0.50?

Look up the values for 0.5 (0.5 + 0.19146 = 0.69146) and -1 (1 - (0.5 +

0.34134) = 0.15866). Then subtract the results (0.69146 - 0.15866) to obtain

the result 0.5328.

Critical values of the standard normal random variable Z

A few particularly important values of Z derived from the standard normal

table are shown below. These values are commonly used for hypothesis
testing and the construction of confidence intervals for the mean µ .

α 0.999 0.995 0.990 0.975 0.950 0.900

1−
2
Z 3.09 2.58 2.33 1.96 1.65 1.28
α
1−
2

Example 4:

The number of CD4+ cells among a large number of terminal HIV patients at a

certain home based care center is distributed normally with mean 425 and

variance 90, 000.

22
a) What is the probability that a randomly identified patient in the group has

less than 800 CD4+ cells?

 X − µ 800 − µ   800 − 425 

P( X < 800 ) = P <  = P Z <  = P( Z < 1.25) = 0.8944
 σ σ   300 

b) What is the probability that a randomly identified patient in the group has

between 500 and 600 CD4+ cells?

 500 − µ X − µ 600 − µ   500 − 425 600 − 425 

P(500 < X < 600 ) = P < < = P <Z< 
 σ σ σ   300 300 

= P(0.25 < Z < 0.58) = P(Z<0.58) – P(Z<0.25) = 0.7190 – 0.5987 = 0.1203 =

12.03%

Examples

1. Why is the normal distribution the most important probability

distribution in inferential statistics?

Because most events in the real world are distributed normally with mean

µ and variance σ2.

2. How is the central limit theorem related to sample sizes of studies?

As the sample size of study approaches the size of the population of

study, the probability distribution being used reduces to the normal

distribution.

3. How large is the area that lies under the standard normal curve

23
 a) to the left of 1.25

b) to the right of 2.34

c) between 1.25 and 2.02

d) to the right of –2.55

e) between –2.23 and –1.25

Solution

a) Look for 1.2 in the X column, go right to the 0.05 column to find the

value 0.3944. Now add 0.5 (for the probability less than zero) to obtain

the final result of 0.8944.

b) How large is the area that lies to the right of 2.34?

P(Z > 2.34) = 1 – P(Z ≤ 2.34) = 1 – (0.5 + 0.4904) = 1 – 0.9904 = 0.0096

c) How large is the area that lies between 1.25 and 2.02?

P(1.25 < Z < 2.02) = P(Z < 2.02) – P(Z < 1.25) = 0.9783 – 0.8944 = 0.0839

d) How large is the area that lies to the right of –2.55?

P(Z>-2.55) = 1 - P(Z ≤ -2.55) where P(Z ≤ -2.55) = P(Z ≥ 2.55) = 1 – P(Z ≤ 2.55)
= 1 – 0.9946 = 0.0054

Hence, P(Z>-2.55) = 1 – 0.0054 = 0.9946

e) How large is the area that lies between –2.23 and –1.25?

24
 P(-2.23 < Z < -1.25) = P(1.25 < Z < 2.23) = P(Z < 2.23) – P(Z < 1.25)

= 0.9871 – 0.8944 = 0.0927

4. The number of boxes of syringes produced daily by a small pharmaceutical

plant in Durban is normally distributed with mean 250 and variance 900.

a) What is the probability that more than 300 boxes of syringes are

produced at a randomly selected day?

 X − µ 300 − µ   300 − 250 

P( X > 300 ) = 1 − P( X ≤ 300 ) = 1 − P ≤  = 1 − P Z ≤ 
 σ σ   30 
= 1 – P(Z ≤ 1.67) = 1 – 0.9525 = 0.0475 = 4.75%

b) What is the probability that between 275 and 300 boxes of syringes are

produced at a randomly selected day?

 275 − µ X − µ 300 − µ   275 − 250 300 − 250 

P(275 < X < 300) = P < <  = P <Z< 
 σ σ σ   30 30 
= P(0.83 < Z 1.67) = P(Z<1.67) – P(Z<0.83) = 0.9525 – 0.7967 = 0.1558 =

15.58%.

25