Course : STAT6171 – Basic Statistics

Basic Probability

Session 4
 Learning Objectives
1. Describe the basic concepts of descriptive and
inferential statistics.

2. Calculate the statistical measurement which related to

descriptive and inferential statistics.

3. Use Microsoft Excel to do data analysis.

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Basic Probability Concepts

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• A probability is the numerical value representing the chance,
likelihood, or possibility that a particular event will occur, such
as the price of a stock increasing, a rainy day, a defective
product, or the outcome five dots in a single toss of a die.

• An event that has no chance of occurring (the impossible

event) has a probability of 0. An event that is sure to occur (the
certain event) has a probability of 1.

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A standard six-sided die has six faces. Each face of the die
contains either one, two, three, four, five, or six dots. If you
roll a die, what is the probability that you will get a face with
five dots?
Solution
Each face is equally likely to occur. Because there are six
faces, the probability of getting a face with five dots is 1/6.

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• In a priori probability, the probability of an occurrence is
based on prior knowledge of the process involved.
• In the empirical probability approach, the probabilities are
based on observed data, not on prior knowledge of a process.
• The third approach to probability, subjective probability,
differs from the other two approaches because subjective
probability differs from person to person.

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Event
Each possible outcome of a variable is referred to as an event.
A simple event is described by a single characteristic.

Joint Event
A joint event is an event that has two or more
characteristics.

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Complement
The complement of event A (represented by the symbol A) includes all events
that are not part of A.

Sample Space
The collection of all the possible events is called the sample space.

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 Planned to Purchase Actually Purchased
Yes No Total
Yes 200 50 250
No 100 650 750
Total 300 700 1,000

What is the sample space? Give examples of simple

events and joint events

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Solution
The sample space consists of the 1,000 respondents. Simple events
are “planned to purchase,” “did not plan to purchase,” “purchased,”
and “did not purchase.” The complement of the event “planned to
purchase” is “did not plan to purchase.” The event “planned to
purchase and actually purchased” is a joint event because in this
joint event, the respondent must plan to purchase the television and
actually purchase it.

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Contingency Tables
There are several ways in which you can view a particular
sample space. The method used in this book involves using a
contingency table (see Section 2.1) such as the one displayed
in Table 4.1. You get the values in the cells of the table by
subdividing the sample space of 1,000 households according to
whether someone planned to purchase and actually purchased a
large TV. For example, 200 of the respondents planned to
purchase a large TV and subsequently did purchase the large
TV.

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Simple probability refers to the probability of occurrence of a simple
event, P(A). A simple probability in the Using Statistics scenario is the
probability of planning to purchase a large TV. How can you determine
the probability of selecting a household that planned to purchase a
large TV?

Thus, there is a 0.25 (or 25%) chance that a household planned to

purchase a large TV. Bina Nusantara University 13
Find the probability that if a household that purchased a large TV is
randomly selected, the television purchased had a faster refresh rate.

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Whereas simple probability refers to the probability of occurrence
of simple events, joint probability refers to the probability of an
occurrence involving two or more events. An example of joint
probability is the probability that you will get heads on the first
toss of a coin and heads on the second toss of a coin.

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In Table 4.2 on page 169, the purchases are cross-classified as having a
faster refresh rate or having a standard refresh rate and whether the
household purchased a streaming media player. Find the probability that a
randomly selected household that purchased a large TV also purchased a
television that had a faster refresh rate and purchased a streaming media
player.

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The marginal probability of an event consists of a set of joint
probabilities. You can determine the marginal probability of a
particular event by using the concept of joint probability just
discussed.

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APPLYING THE CONCEPTS

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APPLYING THE CONCEPTS

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CONDITIONAL PROBABILITY

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• Conditional probability refers to the probability of event
A, given information about the occurrence of another
event, B.

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Table 4.2 on page 169 is a contingency table for whether a household
purchased a television with a faster refresh rate and whether the
household purchased a streaming media player. If a household
purchased a television with a faster refresh rate, what is the probability
that it also purchased a streaming media player?

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In Table 4.1 on page 168, households are classified according to
whether they planned to purchase and whether they actually
purchased large TVs. A decision tree is an alternative to the
contingency table. Figure 4.1 represents the decision tree for this
example.

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Using the cross-classified data in Table 4.2 on page 169, construct
the decision tree. Use the decision tree to find the probability that a
household purchased a streaming media player, given that the
household purchased a television with a faster refresh rate.

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When the outcome of one event does not affect the probability
of occurrence of another event, the events are said to be
independent. Independence can be determined by using
Equation
(4.5).

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In the follow-up survey of the 300 households that actually purchased
large TVs, the households were asked if they were satisfied with their
purchases. Table 4.3 cross-classifies the responses to the
satisfaction question with the responses to whether the television had
a faster refresh rate.

Determine whether being satisfied with the purchase and the refresh
rate of the television purchased are independent.
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Consider the 80 households that purchased televisions that had a
faster refresh rate. In Table 4.3 on page 178, you see that 64
households are satisfied with their purchase, and 16 households are
dissatisfied. Suppose 2 households are randomly selected from the 80
households. Find the probability that both households are satisfied with
their purchase.
A = second household selected is satisfied
B = first household selected is satisfied

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Multiplication Rule for Independent Events

If A and B are independent, the probability of A and B is equal to the

probability of A times the probability of B.

If this rule holds for two events, A and B, then A and B are
independent. Therefore, there are two ways to determine
independence:

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APPLYING
THE
CONCEPTS

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PHStat and Excel Guide

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Sustainable Brand Index takes a closer look at today’s sustainable
consumers based on how consumers act in different situations and the
underlying structures in their attitudes. Sustainable Brand Index has
identified four behaviors that consumers show in relation to
sustainability and brands: Ego, do not care about sustainability;
Moderate, believe that sustainability can be a bit interesting; Smart,
curious about as well as interested in sustainability; and Dedicated,
zealous and well prepared regarding sustainability.

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Suppose a sample of 200 consumers, 100 males and 100
females, were categorized into the consumer behavioral
groups with the following results:

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1. Input the data to excel.
2. To compute the row/column total, you
can: “=SUM(..)”

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Marginal Probability

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 Joint Probability

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David M. Levine, David F. Stephan, Kathryn A. Szabat. Statistics for
Managers using Microsoft Excel. Pearson, 8th Edition.
Thank You

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