4 Basic Probability

USING STATISTICS @ M&R Decision Trees Counting Rule 3

Electronics World Independence Counting Rule 4
Multiplication Rules Counting Rule 5
4.1 Basic Probability Concepts Marginal Probability Using
Events and Sample Spaces the General Multiplication 4.5 Ethical Issues and
Contingency Tables and Rule Probability
Venn Diagrams
Simple Probability 4.3 Bayes’ Theorem USING STATISTICS @ M&R
Joint Probability Electronics World Revisited
Marginal Probability THINK ABOUT THIS: Divine
General Addition Rule Providence and Spam CHAPTER 4 EXCEL GUIDE

4.2 Conditional Probability 4.4 Counting Rules CHAPTER 4 MINITAB GUIDE

Computing Conditional Counting Rule 1
Probabilities Counting Rule 2

Learning Objectives
In this chapter, you learn:

• Basic probability concepts

• Conditional probability
• Bayes’ theorem to revise probabilities
• Various counting rules
146 CHAPTER 4 Basic Probability

he principles of probability help bridge the worlds of descriptive statistics and

T inferential statistics. Reading this chapter will help you learn about different types of
probabilities, how to compute probabilities, and how to revise probabilities in light of
new information. Probability principles are the foundation for the probability distribution, the
concept of mathematical expectation, and the binomial, Poisson, and hypergeometric distribu-
tions, topics that are discussed in Chapter 5.

4.1 Basic Probability Concepts

What is meant by the word probability? A probability is the numeric 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.
In all these instances, the probability involved is a proportion or fraction whose value ranges
between 0 and 1, inclusive. 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.
There are three types of probability:
• A priori
• Empirical
• Subjective
In a priori probability, the probability of an occurrence is based on prior knowledge of the
process involved. In the simplest case, where each outcome is equally likely, the chance of
occurrence of the event is defined in Equation (4.1).

PROBABILITY OF OCCURRENCE
X
Probability of occurrence = (4.1)
T

where

X = number of ways in which the event occurs

T = total number of possible outcomes

Consider a standard deck of cards that has 26 red cards and 26 black cards. The probabil-
ity of selecting a black card is 26>52 = 0.50 because there are X = 26 black cards and
T = 52 total cards. What does this probability mean? If each card is replaced after it is
selected, does it mean that 1 out of the next 2 cards selected will be black? No, because you
cannot say for certain what will happen on the next several selections. However, you can say
that in the long run, if this selection process is continually repeated, the proportion of black
cards selected will approach 0.50. Example 4.1 shows another example of computing an
a priori probability.

EXAMPLE 4.1 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?
Finding A Priori
Probabilities 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.
 4.1 Basic Probability Concepts 147

The preceding examples use the a priori probability approach because the number of ways the
event occurs and the total number of possible outcomes are known from the composition of
the deck of cards or the faces of the die.
In the empirical probability approach, the probabilities are based on observed data, not
on prior knowledge of a process. Surveys are often used to generate empirical probabilities.
Examples of this type of probability are the proportion of individuals in the Using Statistics
scenario who actually purchase big-screen televisions, the proportion of registered voters who
prefer a certain political candidate, and the proportion of students who have part-time jobs.
For example, if you take a survey of students, and 60% state that they have part-time jobs, then
there is a 0.60 probability that an individual student has a part-time job.
The third approach to probability, subjective probability, differs from the other two
approaches because subjective probability differs from person to person. For example, the
development team for a new product may assign a probability of 0.60 to the chance of success
for the product, while the president of the company may be less optimistic and assign a proba-
bility of 0.30. The assignment of subjective probabilities to various outcomes is usually based
on a combination of an individual’s past experience, personal opinion, and analysis of a partic-
ular situation. Subjective probability is especially useful in making decisions in situations in
which you cannot use a priori probability or empirical probability.

Events and Sample Spaces

The basic elements of probability theory are the individual outcomes of a variable under study.
You need the following definitions to understand probabilities.

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

For example, when you toss a coin, the two possible outcomes are heads and tails. Each of
these represents a simple event. When you roll a standard six-sided die in which the six faces
of the die contain either one, two, three, four, five, or six dots, there are six possible simple
events. An event can be any one of these simple events, a set of them, or a subset of all of them.
For example, the event of an even number of dots consists of three simple events (i.e., two,
four, or six dots).

JOINT EVENT
A joint event is an event that has two or more characteristics.

Getting two heads when you toss a coin twice is an example of a joint event because it consists
of heads on the first toss and heads on the second toss.

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

The complement of a head is a tail because that is the only event that is not a head. The com-
plement of five dots on a die is not getting five dots. Not getting five dots consists of getting
one, two, three, four, or six dots.
148 CHAPTER 4 Basic Probability

SAMPLE SPACE
The collection of all the possible events is called the sample space.
The sample space for tossing a coin consists of heads and tails. The sample space
when rolling a die consists of one, two, three, four, five, and six dots. Example 4.2
demonstrates events and sample spaces.

EXAMPLE 4.2 The Using Statistics scenario on page 145 concerns M&R Electronics World. Table 4.1 pres-
ents the results of the sample of 1,000 households in terms of purchase behavior for big-screen
Events and Sample televisions.
Spaces
TA B L E 4 . 1 ACTUALLY PURCHASED
PLANNED
Purchase Behavior for TO PURCHASE Yes No Total
Big-Screen Televisions
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.
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 comple-
ment 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.

Contingency Tables and Venn Diagrams

There are several ways in which you can view a particular sample space. One way involves
using a contingency table (see Section 2.2) 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 big-screen television set.
For example, 200 of the respondents planned to purchase a big-screen television set and subse-
quently did purchase the big-screen television set.
A second way to present the sample space is by using a Venn diagram. This diagram graph-
ically represents the various events as “unions” and “intersections” of circles. Figure 4.1 presents
a typical Venn diagram for a two-variable situation, with each variable having only two events
(A and A ¿ , B and B ¿ ). The circle on the left (the red one) represents all events that are part of A.
The circle on the right (the yellow one) represents all events that are part of B. The area
contained within circle A and circle B (center area) is the intersection of A and B (written as
A ¨ B), since it is part of A and also part of B. The total area of the two circles is the union of
A and B (written as A ´ B) and contains all outcomes that are just part of event A, just part of
event B, or part of both A and B. The area in the diagram outside of A ´ B contains outcomes
that are neither part of A nor part of B.
You must define A and B in order to develop a Venn diagram. You can define either event
as A or B, as long as you are consistent in evaluating the various events. For the big-screen
television example, you can define the events as follows:
A = planned to purchase B = actually purchased
A¿ = did not plan to purchase B¿ = did not actually purchase
In drawing the Venn diagram (see Figure 4.2), you must determine the value of the inter-
section of A and B so that the sample space can be divided into its parts. A ¨ B consists of all
200 households who planned to purchase and actually purchased a big-screen television set.
 4.1 Basic Probability Concepts 149

FIGURE 4.1 B FIGURE 4.2 A B A′ B′ = 650

A B
Venn diagram for events Venn diagram for the
A and B M&R Electronics World
A B
example
50 200 100
A

A B
A B = 350

The remainder of event A (planned to purchase) consists of the 50 households who planned to
purchase a big-screen television set but did not actually purchase one. The remainder of event
B (actually purchased) consists of the 100 households who did not plan to purchase a big-
screen television set but actually purchased one. The remaining 650 households represent
those who neither planned to purchase nor actually purchased a big-screen television set.

Simple Probability
Now you can answer some of the questions posed in the Using Statistics scenario. Because the
results are based on data collected in a survey (refer to Table 4.1), you can use the empirical
probability approach.
As stated previously, the most fundamental rule for probabilities is that they range in value
from 0 to 1. An impossible event has a probability of 0, and an event that is certain to occur
has a probability of 1.
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 big-screen television. How can you determine the probability of selecting a household that
planned to purchase a big-screen television? Using Equation (4.1) on page 146:

X
Probability of occurrence =
T
Number who planned to purchase
P(Planned to purchase) =
Total number of households
250
= = 0.25
1,000

Thus, there is a 0.25 (or 25%) chance that a household planned to purchase a big-screen television.
Example 4.3 illustrates another application of simple probability.

EXAMPLE 4.3 In the Using Statistics follow-up survey, additional questions were asked of the 300 households
that actually purchased big-screen televisions. Table 4.2 indicates the consumers’ responses to
Computing the whether the television purchased had a faster refresh rate and whether they also purchased a
Probability That the Blu-ray disc (BD) player in the past 12 months.
Big-Screen Television Find the probability that if a household that purchased a big-screen television is randomly
Purchased Had a selected, the television purchased had a faster refresh rate.
Faster Refresh Rate

TA B L E 4 . 2 PURCHASED BD PLAYER
REFRESH RATE OF
Purchase Behavior TELEVISION PURCHASED Yes No Total
Regarding Purchasing
a Faster Refresh Rate Faster 38 42 80
Television and Blu-Ray Standard 70 150 220
Disc (BD) Player Total 108 192 300
150 CHAPTER 4 Basic Probability

SOLUTION Using the following definitions:

A = purchased a television with a faster refresh rate
A¿ = purchased a television with a standard refresh rate
B = purchased a Blu-ray disc (BD) player
B¿ = did not purchase a Blu-ray disc (BD) player
Number of faster refresh rate televisions
P(faster refresh rate) =
Total number of televisions
80
= = 0.267
300
There is a 26.7% chance that a randomly selected big-screen television purchased has a faster
refresh rate.

Joint Probability
Whereas simple or marginal 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.
In Table 4.1 on page 148, the group of individuals who planned to purchase and actually
purchased a big-screen television consist only of the outcomes in the single cell “yes—planned
to purchase and yes—actually purchased.” Because this group consists of 200 households, the
probability of picking a household that planned to purchase and actually purchased a big-
screen television is

Planned to purchase and actually purchased

P(Planned to purchase and actually purchased) =
Total number of respondents
200
= = 0.20
1,000
Example 4.4 also demonstrates how to determine joint probability.

EXAMPLE 4.4 In Table 4.2, the purchases are cross-classified as having a faster refresh rate or having a stan-
dard refresh rate and whether the household purchased a Blu-ray disc player. Find the proba-
Determining the bility that a randomly selected household that purchased a big-screen television also purchased
Joint Probability a television that had a faster refresh rate and purchased a Blu-ray disc player.
That a Household
SOLUTION Using Equation (4.1) on page 146,
Purchased a Big-
Screen Television Number that purchased a television with a faster
P(television with a faster refresh refresh rate and a Blu-ray disc player
with a Faster =
rate and Blu-ray disc player)
Refresh Rate and Total number of big-screen television purchasers
a Blu-ray Disc Player 38
= = 0.127
300
Therefore, there is a 12.7% chance that a randomly selected household that purchased a big-
screen television purchased a television that had a faster refresh rate and a Blu-ray disc player.

Marginal Probability
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 dis-
cussed. For example, if B consists of two events, B1 and B2, then P(A), the probability of event A,
 4.1 Basic Probability Concepts 151

consists of the joint probability of event A occurring with event B1 and the joint probability of
event A occurring with event B2. You use Equation (4.2) to compute marginal probabilities.

MARGINAL PROBABILITY

P(A) = P(A and B1) + P(A and B2) + Á + P(A and Bk) (4.2)

where B1, B2, . . . , Bk are k mutually exclusive and collectively exhaustive events, defined
as follows:
Two events are mutually exclusive if both the events cannot occur simultaneously.
A set of events is collectively exhaustive if one of the events must occur.

Heads and tails in a coin toss are mutually exclusive events. The result of a coin toss cannot
simultaneously be a head and a tail. Heads and tails in a coin toss are also collectively exhaus-
tive events. One of them must occur. If heads does not occur, tails must occur. If tails does not
occur, heads must occur. Being male and being female are mutually exclusive and collectively
exhaustive events. No person is both (the two are mutually exclusive), and everyone is one or
the other (the two are collectively exhaustive).
You can use Equation (4.2) to compute the marginal probability of “planned to purchase”
a big-screen television:

P(Planned to purchase) = P(Planned to purchase and purchased)

+ P(Planned to purchase and did not purchase)
200 50
= +
1,000 1,000
250
= = 0.25
1,000

You get the same result if you add the number of outcomes that make up the simple event
“planned to purchase.”

General Addition Rule

How do you find the probability of event “A or B”? You need to consider the occurrence of either
event A or event B or both A and B. For example, how can you determine the probability that a
household planned to purchase or actually purchased a big-screen television? The event “planned
to purchase or actually purchased” includes all households that planned to purchase and all
households that actually purchased a big-screen television. You examine each cell of the contin-
gency table (Table 4.1 on page 148) to determine whether it is part of this event. From Table 4.1,
the cell “planned to purchase and did not actually purchase” is part of the event because it in-
cludes respondents who planned to purchase. The cell “did not plan to purchase and actually pur-
chased” is included because it contains respondents who actually purchased. Finally, the cell
“planned to purchase and actually purchased” has both characteristics of interest. Therefore, one
way to calculate the probability of “planned to purchase or actually purchased” is

P(Planned to purchase or actually purchased) = P(Planned to purchase and did

not actually purchase) + P(Did not plan to
purchase and actually purchase) + P(Planned
to purchase and actually purchased)
50 100 200
= + +
1,000 1,000 1,000
350
= = 0.35
1,000
152 CHAPTER 4 Basic Probability

Often, it is easier to determine P(A or B), the probability of the event A or B, by using the
general addition rule, defined in Equation (4.3).

GENERAL ADDITION RULE

The probability of A or B is equal to the probability of A plus the probability of B minus
the probability of A and B.
P(A or B) = P(A) + P(B) - P(A and B) (4.3)

Applying Equation (4.3) to the previous example produces the following result:

P(Planned to purchase or actually purchased) = P(Planned to purchase)

+ P(Actually purchased) - P(Planned to
purchase and actually purchased)
250 300 200
= + -
1,000 1,000 1,000
350
= = 0.35
1,000

The general addition rule consists of taking the probability of A and adding it to the
probability of B and then subtracting the probability of the joint event A and B from this
total because the joint event has already been included in computing both the probability of
A and the probability of B. Referring to Table 4.1 on page 148, if the outcomes of the event
“planned to purchase” are added to those of the event “actually purchased,” the joint event
“planned to purchase and actually purchased” has been included in each of these simple
events. Therefore, because this joint event has been double-counted, you must subtract it to
provide the correct result. Example 4.5 illustrates another application of the general
addition rule.

EXAMPLE 4.5 In Example 4.3 on page 149, the purchases were cross-classified in Table 4.2 as televisions
that had a faster refresh rate or televisions that had a standard refresh rate and whether the
Using the General household purchased a Blu-ray disc (BD) player. Find the probability that among households
Addition Rule for that purchased a big-screen television, they purchased a television that had a faster refresh rate
the Households or a BD player.
That Purchased
SOLUTION Using Equation (4.3),
Big-Screen
Televisions P(Television had a faster refresh rate)
P(Television had a faster refresh = + P(purchased a BD player) P(Television
-
rate or purchased a BD player) had a faster refresh rate and purchased a BD player)
80 108 38
= + -
300 300 300
150
= = 0.50
300

Therefore, of those households that purchased a big-screen television, there is a 50.0% chance
that a randomly selected household purchased a television that had a faster refresh rate or
purchased a BD player.
 4.2 Conditional Probability 155

4.2 Conditional Probability

Each example in Section 4.1 involves finding the probability of an event when sampling from
the entire sample space. How do you determine the probability of an event if you know certain
information about the events involved?

Computing Conditional Probabilities

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

CONDITIONAL PROBABILITY
The probability of A given B is equal to the probability of A and B divided by the
probability of B.
P1A and B2
P1A|B2 = (4.4a)
P1B2
The probability of B given A is equal to the probability of A and B divided by the
probability of A.
P1A and B2
P1B|A2 = (4.4b)
P1A2
where
P(A and B) = joint probability of A and B
P(A) = marginal probability of A
P(B) = marginal probability of B

Referring to the Using Statistics scenario involving the purchase of big-screen televi-
sions, suppose you were told that a household planned to purchase a big-screen television.
Now, what is the probability that the household actually purchased the television? In this ex-
ample, the objective is to find P(Actually purchased | Planned to purchase). Here you are
given the information that the household planned to purchase the big-screen television.
Therefore, the sample space does not consist of all 1,000 households in the survey. It consists
of only those households that planned to purchase the big-screen television. Of 250 such
households, 200 actually purchased the big-screen television. Therefore, based on Table 4.1
on page 148, the probability that a household actually purchased the big-screen television
given that he or she planned to purchase is

Planned to purchase and actually purchased

P1Actually purchased ƒ Planned to purchase2 =
Planned to purchase
200
= = 0.80
250

You can also use Equation (4.4b) to compute this result:

P1A and B2
P1B|A2 =
P1A2

where
A = planned to purchase
B = actually purchased
156 CHAPTER 4 Basic Probability

then

200>1,000
P1Actually purchased ƒ Planned to purchase2 =
250>1,000
200
= = 0.80
250

Example 4.6 further illustrates conditional probability.

EXAMPLE 4.6 Table 4.2 on page 149 is a contingency table for whether a household purchased a television
with a faster refresh rate and whether the household purchased a Blu-ray disc player. If a
Finding the Condi- household purchased a television with a faster refresh rate, what is the probability that it also
tional Probability purchased a Blu-ray disc player?
of Purchasing
SOLUTION Because you know that the household purchased a television with a faster
a Blu-ray Disc
refresh rate, the sample space is reduced to 80 households. Of these 80 households, 38 also
Player purchased a Blu-ray disc (BD) player. Therefore, the probability that a household
purchased a BD player, given that the household purchased a television with a faster refresh
rate, is

Number purchasing television with

P1Purchased BD player | Purchased faster refresh rate and BD player
television with faster refresh rate) = Number purchasing television
with faster refresh rate
38
= = 0.475
80

If you use Equation (4.4b) on page 155:

A = purchased a television with a faster refresh rate
B = purchased a BD player
then

P1A and B2 38>300

P1B|A2 = = = 0.475
P1A2 80>300

Therefore, given that the household purchased a television with a faster refresh rate,
there is a 47.5% chance that the household also purchased a Blu-ray disc player. You can
compare this conditional probability to the marginal probability of purchasing a Blu-ray
disc player, which is 108>300 = 0.36, or 36%. These results tell you that households that
purchased televisions with a faster refresh rate are more likely to purchase a Blu-ray disc
player than are households that purchased big-screen televisions that have a standard
refresh rate.

Decision Trees
In Table 4.1 on page 148, households are classified according to whether they planned to
purchase and whether they actually purchased big-screen televisions. A decision tree is an
alternative to the contingency table. Figure 4.3 represents the decision tree for this
example.
 4.2 Conditional Probability 157

FIGURE 4.3
ed P(A and B) = 200
Decision tree for M&R has
P(A) =
250 lly Purc 1,000
Electronics World 1,000 Actua
example
to
ned Did N
Plan hase ot A 50
Purc Purch ctually P(A and B′)=
Entire ase 1,000
Set of
Households
Did
to P Not Pl hased
urc a
has n y Purc P(A′ and B) = 100
e Actuall 1,000

750
P(A′) ⴝ Did
1,000 Not
Pur Actua
cha l P(A′ and B′) = 650
se ly 1,000

In Figure 4.3, beginning at the left with the entire set of households, there are two
“branches” for whether or not the household planned to purchase a big-screen television. Each
of these branches has two subbranches, corresponding to whether the household actually pur-
chased or did not actually purchase the big-screen television. The probabilities at the end of
the initial branches represent the marginal probabilities of A and A¿. The probabilities at the
end of each of the four subbranches represent the joint probability for each combination of
events A and B. You compute the conditional probability by dividing the joint probability by
the appropriate marginal probability.
For example, to compute the probability that the household actually purchased, given that
the household planned to purchase the big-screen television, you take P(Planned to purchase
and actually purchased) and divide by P(Planned to purchase). From Figure 4.3,

200>1,000
P1Actually purchased ƒ Planned to purchase2 =
250>1,000
200
= = 0.80
250

Example 4.7 illustrates how to construct a decision tree.

EXAMPLE 4.7 Using the cross-classified data in Table 4.2 on page 149, construct the decision tree. Use the
decision tree to find the probability that a household purchased a Blu-ray disc player, given
Constructing the that the household purchased a television with a faster refresh rate.
Decision Tree for
the Households SOLUTION The decision tree for purchased a Blu-ray disc player and a television with a
faster refresh rate is displayed in Figure 4.4 on page 156. Using Equation (4.4b) on page 155
That Purchased
and the following definitions,
Big-Screen
Televisions A = purchased a television with a faster refresh rate
B = purchased a Blu-ray disc player
P1A and B2 38>300
P1B|A2 = = = 0.475
P1A2 80>300
158 CHAPTER 4 Basic Probability

FIGURE 4.4
r 38
Decision tree for aye
80 B D Pl P(A and B) =
300
purchased a television P(A) = h ased
300 Purc
with a faster refresh rate
and a Blu-ray disc (BD) er
Fast n
player h a sed levisio Did N
ot Pu
c e
Pur Rate T BD P rchase P(A and B′) = 42
Entire esh layer 300
Set of Refr
Households Did
Fas Not P
ter
Re urch Player P(A′ and B) = 70
Tele fresh ase sed BD
visi R Purcha 300
on ate
220
P(A′) = Did
300 Not
BD Purch
Pla a
yer se P(A′ and B′) = 150
300

Independence
In the example concerning the purchase of big-screen televisions, the conditional probability
is 200>250 = 0.80 that the selected household actually purchased the big-screen television,
given that the household planned to purchase. The simple probability of selecting a household
that actually purchased is 300>1,000 = 0.30. This result shows that the prior knowledge that
the household planned to purchase affected the probability that the household actually
purchased the television. In other words, the outcome of one event is dependent on the
outcome of a second event.
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).

INDEPENDENCE
Two events, A and B, are independent if and only if
P1A|B2 = P1A2 (4.5)
where
P1A|B2 = conditional probability of A given B
P1A2 = marginal probability of A

Example 4.8 demonstrates the use of Equation (4.5).

EXAMPLE 4.8 In the follow-up survey of the 300 households that actually purchased big-screen televisions,
the households were asked if they were satisfied with their purchases. Table 4.3 cross-classi-
Determining fies the responses to the satisfaction question with the responses to whether the television had
Independence a faster refresh rate.

TA B L E 4 . 3 SATISFIED WITH PURCHASE?

TELEVISION
Satisfaction with REFRESH RATE Yes No Total
Purchase of Big-Screen
Televisions Faster 64 16 80
Standard 176 44 220
Total 240 60 300
 4.2 Conditional Probability 159

Determine whether being satisfied with the purchase and the refresh rate of the television
purchased are independent.
SOLUTION For these data,
64>300 64
P1Satisfied ƒ faster refresh rate2 = = = 0.80
80>300 80

which is equal to
240
P1Satisfied2 = = 0.80
300
Thus, being satisfied with the purchase and the refresh rate of the television purchased are
independent. Knowledge of one event does not affect the probability of the other event.

Multiplication Rules
The general multiplication rule is derived using Equation (4.4a) on page 155:

P1A and B2
P1A|B2 =
P1B2

and solving for the joint probability P(A and B).

GENERAL MULTIPLICATION RULE

The probability of A and B is equal to the probability of A given B times the probability
of B.
P1A and B2 = P1A|B2P1B2 (4.6)

Example 4.9 demonstrates the use of the general multiplication rule.

EXAMPLE 4.9 Consider the 80 households that purchased televisions that had a faster refresh rate. In Table
4.3 on page 158 you see that 64 households are satisfied with their purchase, and 16 house-
Using the General holds are dissatisfied. Suppose 2 households are randomly selected from the 80 households.
Multiplication Rule Find the probability that both households are satisfied with their purchase.
SOLUTION Here you can use the multiplication rule in the following way. If
A = second household selected is satisfied
B = first household selected is satisfied
then, using Equation (4.6),
P1A and B2 = P1A|B2P1B2
The probability that the first household is satisfied with the purchase is 64/80. However,
the probability that the second household is also satisfied with the purchase depends on the
result of the first selection. If the first household is not returned to the sample after the satis-
faction level is determined (i.e., sampling without replacement), the number of households
remaining is 79. If the first household is satisfied, the probability that the second is also
satisfied is 63/79 because 63 satisfied households remain in the sample. Therefore,
160 CHAPTER 4 Basic Probability

P1A and B2 = a b a b = 0.6380

63 64
79 80
There is a 63.80% chance that both of the households sampled will be satisfied with their
purchase.

The multiplication rule for independent events is derived by substituting P(A) for
P1A|B2 in Equation (4.6).

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.
P1A and B2 = P1A2P1B2 (4.7)

If this rule holds for two events, A and B, then A and B are independent. Therefore, there are
two ways to determine independence:
1. Events A and B are independent if, and only if, P1A|B2 = P1A2.
2. Events A and B are independent if, and only if, P1A and B2 = P1A2P1B2.

Marginal Probability Using the General Multiplication Rule

In Section 4.1, marginal probability was defined using Equation (4.2) on page. You can state
the equation for marginal probability by using the general multiplication rule. If

P1A2 = P1A and B12 + P1A and B22 + Á + P1A and Bk2

then, using the general multiplication rule, Equation (4.8) defines the marginal probability.

MARGINAL PROBABILITY USING THE GENERAL MULTIPLICATION RULE

P1A2 = P1A|B12P1B12 + P1A|B22P1B22 + Á + P1A|Bk2P1Bk2 (4.8)

where B1, B2, Á , Bk are k mutually exclusive and collectively exhaustive events.

To illustrate Equation (4.8), refer to Table 4.1 on page. Let

P1A2 = probability of “planned to purchase”
P1B12 = probability of “actually purchased”
P1B22 = probability of “did not actually purchase”
Then, using Equation (4.8), the probability of planned to purchase is
P1A2 = P1A|B12P1B12 + P1A|B22P1B22

= a ba b + a ba b
200 300 50 700
300 1,000 700 1,000
200 50 250
= + = = 0.25
1,000 1,000 1,000
 4.4 Counting Rules 167

Based on past viewing records, the executive has determined a. If an entrepreneur is selected at random and that individ-
that during prime time, husbands are watching television 60% ual expects that his or her new business will employ 20
of the time. When the husband is watching television, 40% of or more people within five years, what is the probability
the time the wife is also watching. When the husband is not that this individual is an entrepreneur by choice?
watching television, 30% of the time the wife is watching tel- b. Discuss several possible reasons why entrepreneurs by
evision. choice are more likely than entrepreneurs by necessity to
a. Find the probability that if the wife is watching televi- believe that they will grow their businesses.
sion, the husband is also watching television.
4.36 The editor of a textbook publishing company is try-
b. Find the probability that the wife is watching television
ing to decide whether to publish a proposed business statis-
during prime time.
tics textbook. Information on previous textbooks published
SELF 4.34 Olive Construction Company is determin- indicates that 10% are huge successes, 20% are modest
Test ing whether it should submit a bid for a new successes, 40% break even, and 30% are losers. However,
shopping center. In the past, Olive’s main competitor, Base before a publishing decision is made, the book will be
Construction Company, has submitted bids 70% of the time. reviewed. In the past, 99% of the huge successes received
If Base Construction Company does not bid on a job, the favorable reviews, 70% of the moderate successes received
probability that Olive Construction Company will get favorable reviews, 40% of the break-even books received fa-
the job is 0.50. If Base Construction Company bids on a job, vorable reviews, and 20% of the losers received favorable
the probability that Olive Construction Company will reviews.
get the job is 0.25. a. If the proposed textbook receives a favorable review, how
a. If Olive Construction Company gets the job, what is the should the editor revise the probabilities of the various
probability that Base Construction Company did not outcomes to take this information into account?
bid? b. What proportion of textbooks receives favorable
b. What is the probability that Olive Construction Company reviews?
will get the job?
4.37 A municipal bond service has three rating cate-
4.35 Laid-off workers who become entrepreneurs because gories (A, B, and C). Suppose that in the past year, of the
they cannot find meaningful employment with another com- municipal bonds issued throughout the United States,
pany are known as entrepreneurs by necessity. The Wall 70% were rated A, 20% were rated B, and 10% were rated
Street Journal reports that these entrepreneurs by necessity C. Of the municipal bonds rated A, 50% were issued by
are less likely to grow into large businesses than are cities, 40% by suburbs, and 10% by rural areas. Of the
entrepreneurs by choice (J. Bailey, “Desire—More Than municipal bonds rated B, 60% were issued by cities, 20%
Need—Builds a Business,” The Wall Street Journal, May by suburbs, and 20% by rural areas. Of the municipal
21, 2001, p. B4). This article states that 89% of the entrepre- bonds rated C, 90% were issued by cities, 5% by suburbs,
neurs in the United States are entrepreneurs by choice and and 5% by rural areas.
11% are entrepreneurs by necessity. Only 2% of entrepre- a. If a new municipal bond is to be issued by a city, what is
neurs by necessity expect their new business to employ 20 the probability that it will receive an A rating?
or more people within five years, whereas 14% of entrepre- b. What proportion of municipal bonds are issued by cities?
neurs by choice expect to employ at least 20 people within c. What proportion of municipal bonds are issued by
five years. suburbs?

4.4 Counting Rules

In Equation (4.1) on page 146, the probability of occurrence of an outcome was defined as the
number of ways the outcome occurs, divided by the total number of possible outcomes. Often,
there are a large number of possible outcomes, and determining the exact number can be diffi-
cult. In such circumstances, rules have been developed for counting the number of possible
outcomes. This section presents five different counting rules.

Counting Rule 1
Counting rule 1 determines the number of possible outcomes for a set of mutually exclusive
and collectively exhaustive events.
168 CHAPTER 4 Basic Probability

COUNTING RULE 1
If any one of k different mutually exclusive and collectively exhaustive events can occur
on each of n trials, the number of possible outcomes is equal to
kn (4.10)

For example, using Equation (4.10), the number of different possible outcomes from toss-
ing a two-sided coin five times is 25 = 2 * 2 * 2 * 2 * 2 = 32.

EXAMPLE 4.11 Suppose you roll a die twice. How many different possible outcomes can occur?
Rolling a Die Twice SOLUTION If a six-sided die is rolled twice, using Equation (4.10), the number of different
outcomes is 62 = 36.

Counting Rule 2
The second counting rule is a more general version of the first and allows the number of possi-
ble events to differ from trial to trial.

COUNTING RULE 2
If there are k1 events on the first trial, k2 events on the second trial, ... , and kn events on
the nth trial, then the number of possible outcomes is
1k121k22 Á 1kn2 (4.11)

For example, a state motor vehicle department would like to know how many license
plate numbers are available if a license plate number consists of three letters followed by
three numbers (0 through 9). Using Equation (4.11), if a license plate number consists of
three letters followed by three numbers, the total number of possible outcomes is
126212621262110211021102 = 17,576,000.

EXAMPLE 4.12 A restaurant menu has a price-fixed complete dinner that consists of an appetizer, an entrée, a
beverage, and a dessert. You have a choice of 5 appetizers, 10 entrées, 3 beverages, and 6
Determining the desserts. Determine the total number of possible dinners.
Number of Different
Dinners SOLUTION Using Equation (4.11), the total number of possible dinners is
1521102132162 = 900.

Counting Rule 3
The third counting rule involves computing the number of ways that a set of items can be
arranged in order.
 4.4 Counting Rules 169

COUNTING RULE 3
The number of ways that all n items can be arranged in order is
n! = 1n21n - 12 Á 112 (4.12)
where n! is called n factorial, and 0! is defined as 1.

EXAMPLE 4.13 If a set of six books is to be placed on a shelf, in how many ways can the six books be
arranged?
Using Counting
Rule 3 SOLUTION To begin, you must realize that any of the six books could occupy the first po-
sition on the shelf. Once the first position is filled, there are five books to choose from in
filling the second position. You continue this assignment procedure until all the positions
are occupied. The number of ways that you can arrange six books is
n! = 6! = 162152142132122112 = 720

Counting Rule 4
In many instances you need to know the number of ways in which a subset of an entire
group of items can be arranged in order. Each possible arrangement is called a
permutation.

COUNTING RULE 4: PERMUTATIONS

The number of ways of arranging x objects selected from n objects in order is
n!
=
1n - x2!
nPx (4.13)

where
n = total number of objects
x = number of objects to be arranged
1
On many scientific calculators,
there is a button labeled nPr that al- n! = n factorial = n1n - 12 Á 112
lows you to compute permutations.
The symbol r is used instead of x. P = symbol for permutations1

EXAMPLE 4.14 Modifying Example 4.13, if you have six books, but there is room for only four books on the
shelf, in how many ways can you arrange these books on the shelf?
Using Counting
Rule 4 SOLUTION Using Equation (4.13), the number of ordered arrangements of four books
selected from six books is equal to
n! 6! 162152142132122112
= = = = 360
1n - x2! 16 - 42! 122112
nPx

Counting Rule 5
In many situations, you are not interested in the order of the outcomes but only in the number
of ways that x items can be selected from n items, irrespective of order. Each possible selec-
tion is called a combination.
170 CHAPTER 4 Basic Probability

COUNTING RULE 5: COMBINATIONS

The number of ways of selecting x objects from n objects, irrespective of order, is equal to
n!
nCx = (4.14)
x!1n - x2!
where
n = total number of objects
x = number of objects to be arranged
2
On many scientific calculators,
there is a button labeled nCr that al- n! = n factorial = n1n - 12 Á 112
lows you to compute permutations.
The symbol r is used instead of x. C = symbol for combinations2

If you compare this rule to counting rule 4, you see that it differs only in the inclusion of a
term x! in the denominator. When permutations were used, all of the arrangements of the x
objects are distinguishable. With combinations, the x! possible arrangements of objects are
irrelevant.

EXAMPLE 4.15 Modifying Example 4.14, if the order of the books on the shelf is irrelevant, in how many ways
can you arrange these books on the shelf?
Using Counting
SOLUTION Using Equation (4.14), the number of combinations of four books selected from
Rule 5
six books is equal to
n! 6! 162152142132122112
= = = = 15
142132122112122112
nCx
x!1n - x2! 4!16 - 42!

Problems for Section 4.4

APPLYING THE CONCEPTS 4.41 A particular brand of women’s jeans is available in
4.38 If there are 10 multiple-choice questions seven different sizes, three different colors, and three differ-
SELF
Test on an exam, each having three possible answers, ent styles. How many different women’s jeans does the store
how many different sequences of answers are there? manager need to order to have one pair of each type?

4.39 A lock on a bank vault consists of three dials, each 4.42 You would like to make a salad that consists of
with 30 positions. In order for the vault to open, each of the lettuce, tomato, cucumber, and peppers. You go to the super-
three dials must be in the correct position. market, intending to purchase one variety of each of these
a. How many different possible dial combinations are there ingredients. You discover that there are eight varieties of let-
for this lock? tuce, four varieties of tomatoes, three varieties of cucum-
b. What is the probability that if you randomly select a posi- bers, and three varieties of peppers for sale at the
tion on each dial, you will be able to open the bank vault? supermarket. If you buy them all, how many different salads
c. Explain why “dial combinations” are not mathematical can you make?
combinations expressed by Equation (4.14). 4.43 A team is being formed that includes four different
people. There are four different positions on the teams. How
4.40 a. If a coin is tossed seven times, how many different
many different ways are there to assign the four people to
outcomes are possible?
the four positions??
b. If a die is tossed seven times, how many different out-
comes are possible? 4.44 In Major League Baseball, there are five teams in the
c. Discuss the differences in your answers to (a) and (b). Eastern Division of the National League: Atlanta, Florida,