Statistics for Business and Society

MATH1532

Lecture
Binomial and Normal Probability
Distributions
Chapter 4 (Part 2)

Jason Chan, PhD

1
Outline

• Binomial Probability Distribution

• Normal Probability Distribution

2
Binomial Distribution
• Let X has a binomial distribution X ∼ Bin(n, p)
𝑛 𝑘
then P(X = k) = 𝑝 1 − 𝑝 𝑛−𝑘 , k = 0, 1, . . . , n.
𝑘
• Here 0 ≤ p ≤ 1 and n is a positive integer.
• These probabilities sum to 1, so this is a distribution.
• A binomial experiment must satisfy the following four
conditions.
• there are n identical trials
• each trial has only two possible outcomes
• the probabilities of the two outcomes remain constant
• the trials are independent
3
Example: Binomial Distribution
• Example: Suppose that a real estate agent, Donald Biden,
has 5 contacts and he believes that for each contact the
probability of making a sale is 0.4.
• Determine the probability that he make
i. exactly one sale ii. at most one sale
Solution
Let X be the number of sales in 5 contacts X ∼ Bin(n, p)
5
i. P(X=1)= 0.41 0.6 4 =0.2592
1
5
ii. P(X≤ 1)=P(X=0) + P(X=1) = 0.40 0.6 5 + 0.259
0
=0.0778+0.2592=0.3370 4
Example: Binomial Distribution
• Draw 5 balls from an urn , with 6 red balls and 4 green balls.
Determine the probability of getting 2 red balls in 5 draws
• Let X be the number of red balls in 5 draws.
• The draws are independent. X ∼ Bin(5, 0.6).
5
• P(X=2)= 0.62 0.4 3 =0.2304
2
• The binomial distribution is unimodal, i.e. probabilities go up
and then down. The following is the histogram for the above
urn example:

5
Example: Binomial Distribution
5
• P(X=0)= 0.60 0.4 5 =0.0102
0
5
• P(X=1)= 0.61 0.4 4 =0.0768
1
5
• P(X=2)= 0.62 0.4 3 =0.2304
2
5
• P(X=3)= 0.63 0.4 2 =0.3456
3
5
• P(X=4)= 0.64 0.4 1 =0.2592
4
5
• P(X=5)= 0.65 0.4 0 =0.0778
5
6
Example: Binomial Distribution

x 0 1 2 3 4 5
P(X=x) 0.0102 0.0768 0.2304 0.3456 0.2592 0.0778

7
Binomial Probability Distribution
• Example: Each of six randomly selected cola drinkers is
given a glass containing cola S and one containing cola F.
The glasses are identical in appearance except for a code
on the bottom to identify the cola.
Suppose there is actually no tendency among cola drinkers
to prefer one cola to the other.
• Then p = P(a selected individual prefers S) = 0.5, so with
X = the number among the six who prefer S,
• X ~ Bin(6,0.5).
6
• P(X = 3) = 0.53 0.5 3 =0.3125
3
8
Binomial Probability Distribution
• The probability that at least two prefer S is
• P(X≥ 2) = 1 - P(X=0) - P(X=1)
6 0 6 6
• =1- 0.5 0.5 - 0.51 0.5 5 =0.8906
0 1

The probability that at most one prefers S is

6 0 6 6
• P(X  1) = 0.5 0.5 + 0.51 0.5 5 =0.1094
0 1

9
 Example: Binomial Distribution
Example According to York survey, 86% of Canadians have no
saving. A random sample of 8 young is selected. Determine the
probability that
a. Exactly seven young professionals in this sample have no saving
b. At least seven young professionals in this sample have no saving
c. At most seven young professionals in this sample have no saving.
d. At least two young professional in this sample have saving
[a.0.3897 , b. 0.6889 c. 0.7008 d. 0.3111]

10
Binomial Probability Distribution
• Proposition
• If X ~ Bin(n, p), then E(X) = np, V(X) = np(1 – p) = npq, and
X = 𝑛𝑝𝑞 (where q = 1 – p).
• Example: If 75% of all purchases at a certain store are made
with a credit card and X is the number among ten randomly
selected purchases made with a credit card, then
X ~ Bin(10, 0.75).
• Thus E(X) = np = (10)(0.75) = 7.5,
• V(X) = npq = 10(0.75)(0.25)=1.875 and  = 1.37.
11
Example : Binomial Distribution
• Even though X can take on only integer values, E(X) need
not be an integer.
• Example: If we perform a large number of independent
binomial experiments, each with n = 10 trials and p = .75,
then the average number of S’s per experiment will be
close to 7.5.
• The probability that X is within 1 standard deviation of its
mean value is
P(7.5 – 1.37  X  7.5 + 1.37) = P(6.13  X  8.87)
= P(X = 7 or 8)
= 0.532.
12
Normal Distribution
• The probability density function for a normally distributed random
(𝑋−𝜇)2
1 −
variable X is 𝑓 𝑥 = 𝑒 2𝜎2 −∞ < 𝑥 < ∞
𝜎 2𝜋
where 𝜇 and 𝜎 are any number such that −∞ < 𝜇 < ∞ and
𝜎 > 0 and where 𝑒 and 𝜋 are mathematical constant,
𝑒 = 2.71828… and 𝜋 = 3.14159 …
• X ∼ N(𝜇, 𝜎 2 ) where 𝜇 is a location parameter (changing 𝜇 just
shifts the distribution without changing its shape), and 𝜎 is a scale
parameter (the distribution is concentrated around 𝜇 when 𝜎 is
small, and is spread out when 𝜎 is big.)
• N(𝜇, 𝜎 2 ) is unimodal, with mode at 𝜇

13
Normal Distribution

14
Normal Distribution
• Let Φ 𝑧 be the cdf of a standard normal random
variable Z with 𝝁 = 𝟎 and 𝝈 = 𝟏 (i.e. Z ∼ N(0, 1)). Φ
𝑧2
1 −
′(z) = 𝑒 2
2𝜋
• Use a normal table
• The probabilities for Normal r.v.’s can be calculated using
Φ plus :
• Continuity ( i.e. Φ 𝑧 − =Φ 𝑧 )
• Symmetry (i.e.Φ −𝑧 =P(Z ≤ −𝑧)=P(Z ≥ 𝑧)
= 1- P(Z ≤ 𝑧)=1-Φ 𝑧
• Transformation 15
Normal Distribution
EXAMPLE Let’s determine the following standard normal
probabilities:
(a) P(Z  1.25),
(b) P(Z > 1.25),
(c) P(Z  –1.25), and
(d) P(–0.38  Z  1.25).

16
Normal Distribution

•
a. P(Z  1.25) = Φ(1.25), a probability that is tabulated in
Appendix Table at the intersection of the row
marked 1.2 and the column marked .05.
• The number there is 0.8944, so P(Z  1.25) = 0.8944.

17
Normal Distribution
• b. P(Z > 1.25) = 1 – P(Z  1.25) = 1 – Φ(1.25), the area
under the z curve to the right of 1.25 (an upper-tail
area). Then Φ(1.25) = 0.8944 implies that
P(Z > 1.25) = 0.1056.

18
Normal Distribution
• c. P(Z  –1.25) = Φ(–1.25), a lower-tail area. Directly from
Appendix Table , Φ(–1.25) = 0.1056.
• By symmetry of the z curve, this is the same answer as
in part (b).

19
 Normal Distribution
d.P(–0.38  Z  1.25) is the area under the standard
normal curve above the interval whose left endpoint is
–0.38 and whose right endpoint is 1.25.
P(–0.38  Z  1.25) = Φ(1.25) – Φ(–0.38)
= 0.8944 – 0.3520
= 0.5424

20
Example: Normal Distribution
• Let X ∼ N(1, 16). Find P (X ≤ 0) , P (X ≤ 1) , P (X ≤ 2) , P (X ≤ -3) ,
P (X ≥ 4) , P (X ≥- 4) , P(2 ≤ X ≤ 6), P(0.8 ≤ X ≤ 2.53).
Solution
𝑋−𝜇 0−𝜇 𝑋−1 0−1
𝐏 𝐗 ≤ 𝟎 =𝑃 ≤ =𝑃 ≤ = 𝑃(𝑍 ≤ −0.25)
𝜎 𝜎 4 4
= Φ −0.25 =0.4013

𝑋−1 1−1
P (X ≤ 1)=𝑃 4
≤
4
= 𝑃(𝑍 ≤ 0)=Φ 0 =0.5

𝑋−1 2−1
P (X ≤ 2)=𝑃 4
≤
4
= 𝑃(𝑍 ≤ 0.25)= Φ 0.25 = 0.5987

21
Example: Normal Distribution
𝑋−1 −3−1
P (X ≤ -3) =𝑃 ≤ = 𝑃 𝑍 ≤ −1
4 4
= Φ −1 = 0.1587
𝑋−1 4−1
P (X ≥ 4 ) =𝑃 ≥ = 𝑍 ≥ 0.75 = 1 − 𝑃(𝑍 ≤
4 4

22
Example: Normal Distribution
2−1 𝑋−1 6−1
P(2 ≤ X ≤ 6) =𝑃 ≤ ≤ = 𝑃 0.25 ≤ 𝑍 ≤ 1.25 =
4 4 4
𝑃 𝑍 ≤ 1.25 − 𝑃 𝑍 ≤ 0.25 = Φ 1.25 − Φ 0.25
= 0.8944 − 0.5987 = 0.2957

0.8−1 𝑋−1 2.53−1

P(0.8 ≤ X ≤2.53) =𝑃 ≤ ≤
4 4 4
= 𝑃 −0.05 ≤ 𝑍 ≤ 0.3825
= 𝑃 𝑍 ≤ 0.3825 − 𝑃 𝑍 ≤ −0.05
= Φ 0.38 − Φ −0.05
= 0.6480 −0.4810
= 0.1670
23
Example: Normal Distribution
The recent average starting salary for new college graduates
in marketing is $38,000. Assume salaries are normally
distributed with a standard deviation $3500. Determine the
probability of a new graduate receiving a salary of
a. less than $45,000 b. between $35,000 and $40,000
Solution
Let X be the salary for a new graduate in marketing
X ∼ N(38000, 35002).
45000−38000
P(X < 45000 ) = P(X ≤ 45000) = 𝑃 𝑍 ≤
3500
= 𝑃 𝑍 ≤ 2 = Φ 2 = 0.9772

24
Example: Normal Distribution
35000−38000 40000−38000
P(𝟑𝟓𝟎𝟎𝟎 ≤ X ≤ 40000) =𝑃 ≤𝑍≤
3500 3500
= 𝑃 −0.8571 ≤ 𝑍 ≤ 0.5714
= 𝑃 𝑍 ≤ 0.5714 − 𝑃 𝑍 ≤ −0.8571
= Φ 0.57 − Φ −0.86
= 0.7157 − 0.1949 = 0.5208

25
Normal Distribution
• By symmetry, the first percentile is as far below 0 as the
99th is above 0, so equals –2.33 (1% lies below the first
and also above the 99th).

26
Normal Distribution
• For example, to find the 95th percentile, we look for
0.9500 inside the table.

Although 0.9500 does not appear, both 0.9495 and 0.9505

do, corresponding to z = 1.64 and 1.65, respectively.

• Since 0.9500 is halfway between the two probabilities that

do appear, we will use 1.645 as the 95th percentile and
–1.645 as the 5th percentile.

27
Normal Distribution
• Notation
z will denote the value on the z axis for which  of the
area under the z curve lies to the right of z.

28
Normal Distribution
• z.05 is the 100(1 – 0.05)th = 95th percentile of the standard
normal distribution, so z.05 = 1.645.
• The area under the standard normal curve to the left of
–z.05 is also 0.05.

29
Normal Distribution
• The amount of distilled water dispensed by a certain
machine is normally distributed with mean value 64 oz and
standard deviation 0.78 oz. What container size c will
ensure that overflow occurs only 0.5% of the time?
• If X denotes the amount dispensed, the desired condition
is that P(X > c) = 0.005, or, equivalently, that P(X  c) =
0.995.
• Thus c is the 99.5th percentile of the normal distribution
with  = 64 and  = 0.78.

30
Normal Distribution
• 𝑃 𝑋 ≥ 𝑐 =0.05
𝑐−64
•𝑃 𝑧 > =0.05
2.58

• c = 64 + (2.58)(0.78) = 64 + 2.0 = 66 oz
•

31
Normal Distribution
• The normal distribution is often used as an approximation
to the distribution of values in a discrete population.
• In such situations, extra care should be taken to ensure
that probabilities are computed in an accurate manner.

32
Practice Question
• York Trucking Company determined that on an annual
basis the distance traveled per truck is normally distributed
with a mean of 54.6 thousand miles and a standard
deviation of 11.8 thousand miles.
a. What percentage of trucks can be expected to travel
either below 32 or above 65 thousand miles in the tear?
b. How many miles will be traveled by at least 70% of the
truck?
c. How many miles will be traveled by at most 85% of the
truck?
33
 Practice Question
• An orange juice producer buys all his oranges from a large
grove. The amount of juice squeezed from each of these
oranges is approximately normally distributed with a mean of
4.86 ounces and a standard deviation of 0.37 ounce.
a. 85% of the oranges will contain at least how many ounces of
juice?
b. 78% of the oranges will contain at most how many ounces
of juice?
c. 90% of the oranges are between what two values (in
ounces) symmetrically distributed around the population
mean?
34
Normal Approximation
• The normal distribution is often used as an approximation
to the distribution of values in a discrete population.
• In such situations, extra care should be taken to ensure
that probabilities are computed in an accurate manner.
• It is useful in the following application of the normal
distribution to the computation of binomial probabilities.
• The correction for discreteness of the underlying
distribution is often called a continuity correction.

35
Normal Approximation
• IQ in a particular population is known to be approximately
normally distributed with  = 100 and  = 15. What is the
probability that a randomly selected individual has an IQ of
at least 125?
• Let X = the IQ of a randomly chosen person, compute
P(X  125).
• However, the IQ population distribution is actually
discrete, since IQs are integer-valued.

36
Normal Approximation
• Thus we really want the area under the approximating
normal curve to the right of 124.5.
• Standardizing this value gives P(Z  1.63) = 0.0516,
whereas standardizing 125 results in P(Z  1.67) = 0.0475.
• The difference is not great, but the answer 0.0516 is more
accurate. Similarly, P(X = 125) would be approximated by
the area between 124.5 and 125.5, since the area under
the normal curve above the single value 125 is zero.

37
Normal Approximation
• A binomial distribution with n = 20, p = 0.6, for which
 = 20(0.6) = 12 and  = 20(0.6)(0.4)=2.19

38
Normal Approximation
• A normal curve with this  and  has been superimposed
on the probability histogram.

Although the probability histogram is a bit skewed, the

normal curve gives a very good approximation, especially
in the middle part of the picture.

The area of any rectangle (probability of any particular

X value) except those in the extreme tails can be accurately
approximated by the corresponding normal curve area.

39
Normal Approximation
• For example, P(X = 10)
the area under the normal curve between 9.5 and 10.5 is
P(–1.14  Z  –0.68) = 0.1212.

More generally, as long as the binomial probability

histogram is not too skewed, binomial probabilities can be
well approximated by normal curve areas.

It is then customary to say that X has approximately a

normal distribution.

40
Normal Approximation
Proposition
Let X be a binomial r.v based on n trials with success
probability p. Then if the binomial probability histogram is
not too skewed, X has approximately a normal distribution
with  = np and  = 𝑛𝑝𝑞

41
Normal Approximation
• Suppose that 25% of all students at a large public
university receive financial aid.
• Let X be the number of students in a random sample of
size 50 who receive financial aid, so that p = 0.25.
Then  = 12.5 and  = 3.06.
• Since np = 50(0.25) = 12.5  10 and nq = 37.5  10, the
approximation can safely be applied.

42
Normal Approximation

43
Normal Approximation

• The exact probabilities are 0.2622 and 0.8348, respectively,

so the approximations are quite good.

• In the last calculation, the probability P(5  X  15) is being

approximated by the area under the normal curve
between 4.5 and 15.5—the continuity correction is used
for both the upper and lower limits.

44
Normal Approximation
• the approximation is adequate provided that both np  10 and
np  10, since there is then enough symmetry in the underlying
binomial distribution.
A direct proof of this result is quite difficult. In the next chapter
we’ll see that it is a consequence of a more general result
called the Central Limit Theorem.
In all honesty, this approximation is not so important for
probability calculation as it once was.

• This is because software can now calculate binomial

probabilities exactly for quite large values of n.

45
Practice Question
• A professor is giving a test to a class of 300 students. From
past semesters, he knows that 55% of students taking this
course receive at least a 60% on this exam. What is the
probability that at least 180 of his students will receive a
60% on the test?

46
Practice Question
From many years of observation, a biologist knows that the
probability is only 0.58 that any given Arctic tern will
survive the migration from its summer nesting area to its
winter feeding grounds. A random sample of 800 Arctic
terns were banded at their summer nesting area. What is
the approximate probability that between 418 and 478 of
the banded Arctic terns will survive the migration?

47