Statistics for Business and

Economics
Chapter
Random Variables &
Probability Distributions

Content
1. Two Types of Random Variables
2. Probability Distributions for Discrete
Random Variables
3. The Binomial Distribution
4. Poisson and Hypergeometric Distributions
5. Probability Distributions for Continuous
Random Variables
6. The Normal Distribution

Content (continued)
7. Descriptive Methods for Assessing
Normality
8. Approximating a Binomial Distribution with
a Normal Distribution
9. Uniform and Exponential Distributions
10. Sampling Distributions
11. The Sampling Distribution of a Sample
Mean and the Central Limit Theorem

Learning Objectives
1. Develop the notion of a random variable
2. Learn that numerical data are observed values of
either discrete or continuous random variables
3. Study two important types of random variables
and their probability models: the binomial and
normal model
4. Define a sampling distribution as the probability of
a sample statistic
5. Learn that the sampling distribution of x follows a
normal model
2011 Pearson Education, Inc

Thinking Challenge
Youre taking a 33 question multiple
choice test. Each question has 4
choices. Clueless on 1 question, you
decide to guess. Whats the chance
youll get it right?
If you guessed on all 33 questions, what
would be your grade? Would you pass?

Two Types of
Random Variables

Random Variable
A random variable is a variable that assumes
numerical values associated with the random
outcomes of an experiment, where one (and only
one) numerical value is assigned to each sample
point.

Discrete
Random Variable
Random variables that can assume a countable
number (finite or infinite) of values are called
discrete.

Discrete Random Variable

Examples
Experiment

Random
Variable

Possible
Values

Make 100 Sales Calls

# Sales

0, 1, 2, ..., 100

Inspect 70 Radios

# Defective

0, 1, 2, ..., 70

Answer 33 Questions

# Correct

0, 1, 2, ..., 33

Count Cars at Toll

Between 11:00 & 1:00

# Cars
Arriving

0, 1, 2, ...,

Continuous
Random Variable
Random variables that can assume
values corresponding to any of the
points contained in one or more
intervals (i.e., values that are infinite
and uncountable) are called
continuous.

Continuous Random
Variable Examples
Experiment

Random
Variable

Possible
Values

Weigh 100 People

Weight

45.1, 78, ...

Measure Part Life

Hours

900, 875.9, ...

Amount spent on food

$ amount

54.12, 42, ...

Measure Time
Between Arrivals

Inter-Arrival 0, 1.3, 2.78, ...

Time

Probability Distributions
for Discrete Random
Variables

Discrete
Probability Distribution
The probability distribution of a
discrete random variable is a
graph, table, or formula that specifies
the probability associated with each
possible value the random variable
can assume.

Requirements for the

Probability Distribution of a
Discrete Random Variable x
1. p(x) 0 for all values of x
p(x) = 1
where the summation of p(x) is over all possible
values of x.

Discrete Probability
Distribution Example
Experiment: Toss 2 coins. Count number of
tails.
Probability Distribution
Values, x Probabilities, p(x)
0

1/4 = .25

2/4 = .50

1/4 = .25

Visualizing Discrete
Probability Distributions
Listing

Table

{ (0, .25), (1, .50), (2, .25) }

# Tails

f(x)
Count

p(x)

0
1
2

1
2
1

.25
.50
.25

Graph
p(x)
.50
.25
.00

Formula
x
0

p (x ) =

n!
px(1 p)n x
x!(n x)!

Summary Measures
1. Expected Value (Mean of probability distribution)
Weighted average of all possible values
= E(x) = x p(x)
2. Variance
Weighted average of squared deviation about
mean
2 = E[(x (x p(x)
3.

Standard Deviation

Summary Measures
Calculation Table
x

p(x)

Total

x p(x)

xp(x)

(x

(x p(x)

(x p(x)

Thinking Challenge
You toss 2 coins. Youre interested in
the number of tails. What are the
expected value, variance, and
standard deviation of this random
variable, number of tails?

Expected Value & Variance

Solution
x

p(x)

x p(x)

.25

1.00

1.00

.25

.50

.50

.25

.50

1.00

1.00

.25

= 1.0

(x (x p(x)

Probability Rules for Discrete

Random Variables
Let x be a discrete random variable with probability
distribution p(x), mean , and standard deviation .
Then, depending on the shape of p(x), the following
probability statements can be made:
Chebyshevs Rule

Empirical Rule

P x x

.68

P x 2 x 2

34

.95

89

1.00

P x 3 x 3

The Binomial
Distribution

Binomial Distribution
Number of successes in a sample of n
observations (trials)
Number of reds in 15 spins of roulette wheel
Number of defective items in a batch of 5 items
Number correct on a 33 question exam
Number of customers who purchase out of 100
customers who enter store (each customer is
equally likely to pyrchase)

Binomial Probability
Characteristics of a Binomial Experiment
1. The experiment consists of n identical trials.
2. There are only two possible outcomes on each trial. We
will denote one outcome by S (for success) and the other
by F (for failure).
3. The probability of S remains the same from trial to trial.
This probability is denoted by p, and the probability of
F is denoted by q. Note that q = 1 p.
4. The trials are independent.
5. The binomial random variable x is the number of Ss in
n trials.

Binomial Probability
Distribution

n
n!
x n x
p( x) p q
p x (1 p) n x
x ! (n x)!
x
p(x) = Probability of x Successes
p = Probability of a Success on a single trial
q = 1p
n = Number of trials
x = Number of Successes in n trials
(x = 0, 1, 2, ..., n)
n x = Number of failures in n trials

Binomial Probability
Distribution Example
Experiment: Toss 1 coin 5 times in a row. Note
number of tails. Whats the probability of 3 tails?
n!
p( x)
p x (1 p) n x
x !(n x)!
5!
p(3)
.53 (1 .5)53
3!(5 3)!
.3125

Binomial Probability Table (Portion)

n=5

.01

0.50

.99

.951

.031

.000

.999

.188

.000

1.000

.500

.000

1.000

.812

.001

1.000

.969

.049

Cumulative Probabilities
p(x 3) p(x 2) = .812 .500 = .312

Binomial Distribution
Characteristics

n = 5 p = 0.1

Mean
E(x) np
Standard Deviation

npq

n = 5 p = 0.5

Binomial Distribution
Thinking Challenge
Youre a telemarketer selling service contracts for
Macys. Youve sold 20 in your last 100 calls (p
= .20). If you
call 12 people tonight, whats the probability of
A. No sales?
B. Exactly 2 sales?
C. At most 2 sales?
D. At least 2 sales?

Binomial Distribution Solution*

n = 12, p = .20
A. p(0) = .0687
B. p(2) = .2835
C. p(at most 2) = p(0) + p(1) + p(2)
= .0687 + .2062 + .2835
= .5584
D. p(at least 2)
= p(2) + p(3)...+ p(12)
= 1 [p(0) + p(1)]
= 1 .0687 .2062
= .7251

4.4
Other Discrete Distributions:
Poisson and Hypergeometric

Poisson Distribution
1. Number of events that occur in an interval
events per unit
Time, Length, Area, Space

2. Examples
Number of customers arriving in 20 minutes
Number of strikes per year in the U.S.
Number of defects per lot (group) of DVDs

Characteristics of a Poisson
Random Variable
1. Consists of counting number of times an event
occurs during a given unit of time or in a given
area or volume (any unit of measurement).
2. The probability that an event occurs in a given unit
of time, area, or volume is the same for all units.
3. The number of events that occur in one unit of
time, area, or volume is independent of the number
that occur in any other mutually exclusive unit.
4. The mean number of events in each unit is denoted
by

Poisson Probability
Distribution Function
x

p (x )

x!

(x = 0, 1, 2, 3, . . .)

p(x) = Probability of x given
= Mean (expected) number of events in unit
e = 2.71828 . . . (base of natural logarithm)
x = Number of events per unit

Poisson Probability
Distribution Function
= 0.5

Mean

E(x)
= 6
Standard Deviation

Poisson Distribution Example

Customers arrive at a rate of 72 per hour. What
is the probability of 4 customers arriving in 3
minutes?

Poisson Distribution Solution

72 Per Hr. = 1.2 Per Min. = 3.6 Per 3 Min. Interval

p ( x)

e
x

x!

3.6

p (4)

4!

-3.6

.1912

Poisson Probability Table (Portion)

Cumulative Probabilities
p(x 4) p(x 3) = .706 .515 = .191

Thinking Challenge
You work in Quality Assurance for an
investment firm. A clerk enters 75
words per minute with 6 errors per
hour. What is the probability of 0
errors in a 255-word bond
transaction?

Poisson Distribution Solution:

Finding *

75 words/min = (75 words/min)(60 min/hr)

= 4500 words/hr

6 errors/hr = 6 errors/4500 words

= .00133 errors/word

In a 255-word transaction (interval):

= (.00133 errors/word )(255 words)
= .34 errors/255-word transaction

Poisson Distribution Solution:

Finding p(0)*
p( x)

e
x

x!

.34

p(0)

0!

-.34

.7118

Characteristics of a
Hypergeometric
Random Variable
1. The experiment consists of randomly drawing n
elements without replacement from a set of N
elements, r of which are Ss (for success) and (N
r) of which are Fs (for failure).
2. The hypergeometric random variable x is the
number of Ss in the draw of n elements.

Hypergeometric Probability
Distribution Function
r
x
p x

nr

N
where . . .

N r
n x
N
n

[x = Maximum [0, n (N r), ,

Minimum (r, n)]

r N r n N n

N 2 N 1
2

Hypergeometric Probability
Distribution Function
N = Total number of elements
r = Number of Ss in the N elements
n = Number of elements drawn
x = Number of Ss drawn in the n
elements

Probability
Distributions for
Continuous Random
Variables

Continuous Probability
Density Function
The graphical form of the probability distribution for a
continuous random variable x is a smooth curve

Continuous Probability Density

Function
This curve, a function of x, is denoted by the symbol f(x)
and is variously called a probability density function
(pdf), a frequency function, or a probability
distribution.
The areas under a probability
distribution correspond to
probabilities for x. The area A
beneath the curve between two
points a and b is the probability
that x assumes a value between a and b.

The Normal
Distribution

Importance of
Normal Distribution
1. Describes many random processes or
continuous phenomena
2. Can be used to approximate discrete
probability distributions

Example: binomial

3. Basis for classical statistical inference

Normal Distribution
1. Bell-shaped &
symmetrical

f(x )

2. Mean, median, mode

are equal

x
Mean
Median
Mode

Probability Density Function

1
f (x)
e
2

1 x

2

where
= Mean of the normal random variable x
= Standard deviation
= 3.1415 . . .
e = 2.71828 . . .
P(x < a) is obtained from a table of normal
probabilities

Effect of Varying
Parameters ( & )

Normal Distribution
Probability
Probability is
area under
curve!

P(c x d)

f(x)

f (x)dx ?

Standard Normal Distribution

The standard normal distribution is a normal
distribution with = 0 and = 1. A random
variable with a standard normal distribution,
denoted by the symbol z, is called a standard
normal random variable.

The Standard Normal Table:

P(0 < z < 1.96)
Standardized Normal Probability
Table (Portion)
Z

.04

.05

.06

=1

1.8 .4671 .4678 .4686

.4750

1.9 .4738 .4744 .4750

2.0 .4793 .4798 .4803

= 0 1.96 z

2.1 .4838 .4842 .4846

Probabilities

Shaded area
exaggerated

The Standard Normal Table:

P(1.26 z 1.26)
Standardized Normal Distribution

=1
.3962

.3962

P(1.26 z 1.26)
= .3962 + .3962

1.26 1.26 z
=0
Shaded area exaggerated

= .7924

The Standard Normal Table:

P(z > 1.26)
Standardized Normal Distribution

=1
P(z > 1.26)

.5000

= .5000 .3962

.3962

1.26
=0

= .1038

The Standard Normal Table:

P(2.78 z 2.00)
Standardized Normal Distribution

=1
P(2.78 z 2.00)

.4973

= .4973 .4772

.4772

2.78 2.00

=0

Shaded area exaggerated

= .0201

The Standard Normal Table:

P(z > 2.13)
Standardized Normal Distribution

=1
.4834

P(z > 2.13)

.5000

= .4834 + .5000

2.13
=0
Shaded area exaggerated

= .9834

Non-standard Normal
Distribution
Normal distributions differ by
mean & standard deviation.

Each distribution would

require its own table.

f(x)

Thats an infinite
number of tables!

Property of Normal Distribution

If x is a normal random variable with mean and
standard deviation , then the random variable z,
defined by the formula
x
z

has a standard normal distribution. The value z describes

the number of standard deviations between x and .

Standardize the
Normal Distribution
x
z

Normal
Distribution

Standardized Normal
Distribution

= 1

= 0
One table!

Finding a Probability Corresponding to a

Normal Random Variable
1. Sketch normal distribution, indicate mean, and shade
the area corresponding to the probability you want.
2. Convert the boundaries of the shaded area from x
values to standard normal random variable z
x
z

Show the z values under corresponding x values.

3. Use Table IV in Appendix A to find the areas
corresponding to the z values. Use symmetry when
necessary.

Non-standard Normal = 5, = 10:

P(5 < x < 6.2)
Normal
Distribution

x 6.2 5
z

.12

10
Standardized Normal
Distribution

= 10

=1
.0478

= 5 6.2

Shaded area exaggerated

= 0 .12

Non-standard Normal = 5, = 10:

P(3.8 x 5)
Normal
Distribution

x 3.8 5
z

.12

10

Standardized Normal
Distribution

= 10

=1
.0478

3.8 = 5

Shaded area exaggerated

-.12 = 0

Non-standard Normal = 5, = 10:

P(2.9 x 7.1)

x 2.9 5
z

.21

10

x 7.1 5
z

.21

10

Normal
Distribution

Standardized Normal
Distribution

= 10

=1
.1664
.0832 .0832

2.9 5 7.1

x
Shaded area exaggerated

-.21 0 .21

Non-standard Normal = 5, = 10: P(x

8)
x 85
z

.30

10
Normal
Standardized Normal
Distribution

Distribution

= 10

=1
.5000
.1179

=5

x
Shaded area exaggerated

=0

.3821

.30 z

Non-standard Normal = 5, = 10:

P(7.1 X 8)
x 7.1 5
z

.21

10

Normal
Distribution

x 85
z

.30

10
Standardized Normal
Distribution

= 10

=1
.1179
.0832

=5

7.1 8

Shaded area exaggerated

=0

.21 .30

.0347

Normal Distribution
Thinking Challenge
You work in Quality Control for GE. Light bulb life
has a normal distribution with = 2000 hours and
= 200 hours. Whats the probability that a bulb will
last
A. between 2000 and 2400
hours?
B. less than 1470 hours?

Solution* P(2000 x 2400)

x 2400 2000
z

2.0

200
Normal
Distribution

Standardized Normal
Distribution

= 200

=1

.4772
= 2000 2400

=0

2.0

Solution* P(x 1470)

x 1470 2000
z

2.65

200
Normal
Distribution

Standardized Normal
Distribution

= 200

=1
.5000

.0040
1470

= 2000

.4960

2.65 = 0

Finding z-Values
for Known Probabilities
Standardized Normal
Probability Table (Portion)

What is Z, given
P(z) = .1217?
.1217

=1

.00

.01

0.2

0.0 .0000 .0040 .0080

0.1 .0398 .0438 .0478

=0
Shaded area
exaggerated

.31
?

0.2 .0793 .0832 .0871

0.3 .1179 .1217 .1255

Finding x Values
for Known Probabilities
Normal Distribution

Standardized Normal Distribution

= 10

=1
.1217

= 5 8.1
?

.1217

= 0 .31

x z 5 .3110
Shaded areas exaggerated

4.7
Descriptive Methods for
Assessing Normality

Determining Whether the Data

Are from an Approximately
Normal Distribution
1. Construct either a histogram or stem-and-leaf
display for the data and note the shape of the graph.
If the data are approximately normal, the shape of
the histogram or stem-and-leaf display will be
similar to the normal curve.

Determining Whether the

Data Are from an
Approximately Normal
Distribution
2. Compute the intervals x s, x 2s, and x 3s, and
determine the percentage of measurements falling
in each. If the data are approximately normal, the
percentages will be approximately equal to 68%,
95%, and 100%, respectively; from the Empirical
Rule (68%, 95%, 99.7%).

Determining Whether the Data Are from

an Approximately Normal Distribution
3. Find the interquartile range, IQR, and standard
deviation, s, for the sample, then calculate the ratio
IQR/s. If the data are approximately normal, then
IQR/s 1.3.

IQR Q3 Q1

s
s

4. Examine a normal
probability plot for the
data. If the data are
approximately normal,
the points will fall
(approximately) on a
straight line.

Expected zscore

Determining Whether the Data

Are from an Approximately
Normal Distribution

Observed value
2011 Pearson Education, Inc

Normal Probability Plot

A normal probability plot for a data
set is a scatterplot with the ranked data
values on one axis and their
corresponding expected z-scores from a
standard normal distribution on the other
axis. [Note: Computation of the expected
standard normal z-scores are beyond the
scope of this text. Therefore, we will rely
on available statistical software packages
to generate a normal probability plot.]

Approximating a
Binomial Distribution
with a Normal
Distribution

Normal Approximation of
Binomial Distribution
1. Useful because not all
binomial tables exist
2. Requires large sample
size
3. Gives approximate
probability only
4. Need correction for
continuity

n = 10 p = 0.50
p(x)
.3
.2
.1
.0
0

x
2

10

Why Probability, is Approximate

Probability Added
by Normal Curve

p(x)
.3
.2

Probability Lost by
Normal Curve

.1
.0

x
0

Binomial Probability:
Bar Height

10

Normal Probability: Area Under

Curve from 3.5 to 4.5

Correction for Continuity

1. A 1/2 unit adjustment to
discrete variable
2. Used when approximating
a discrete distribution
with a continuous
distribution
3. Improves accuracy
3.5
(4 .5)

4.5
(4 + .5)

Using a Normal Distribution to

Approximate Binomial Probabilities
1. Determine n and p for the binomial distribution,
then calculate the interval:

3 np 3 np 1 p
If interval lies in the range 0 to n, the normal
distribution will provide a reasonable
approximation to the probabilities of most
binomial events.

Using a Normal Distribution to

Approximate Binomial Probabilities
2. Express the binomial probability to be
approximated by the form
P x a orP x b P x a
For example,
P x 3 P x 2

P x 5 1 P x 4

P 7 x 10 P x 10 P x 6

Using a Normal Distribution to

Approximate Binomial Probabilities
3. For each value of interest a, the correction for
continuity is (a + .5), and the corresponding
standard normal z-value is
a .5

Using a Normal Distribution to

Approximate Binomial Probabilities
4. Sketch the approximating normal distribution and
shade the area corresponding to the event of
interest. Using Table IV and the z-value (step 3),
find the shaded area.
This is the approximate
probability of the
binomial event.

Normal Approximation Example

What is the normal approximation of p(x = 4)
given n = 10, and p = 0.5?
P(x)

.3
.2
.1
.0

x
0

4
6
3.5 4.5

10

Normal Approximation Solution

1. Calculate the interval:
np 3 np 1 p 10 0.5 3 10 0.5 1 0.5
5 4.74 0.26, 9.74

Interval lies in range 0 to 10, so normal

approximation can be used
2.

Express binomial probability in form:

P x 4 P x 4 P x 3

Normal Approximation Solution

3. Compute standard normal z values:
a .5 n p

n p 1 p
a .5 n p

n p 1 p

3.5 10 .5

10 .5 1 .5
4.5 10 .5

10 .5 1 .5

0.95

0.32

Normal Approximation Solution

4. Sketch the approximate normal distribution:

=0
=1

.3289
- .1255
.2034
.1255
.3289
-.95

-.32

Normal Approximation Solution

5. The exact probability from the binomial formula is
0.2051 (versus .2034)

.3
.2
.1
.0

p(x)

x
0

10

Other Continuous
Distributions:
Uniform and
Exponential

Uniform Distribution
Continuous random variables that appear to have
equally likely outcomes over their range of possible
values possess a uniform probability distribution.
Suppose the random
variable x can assume
values only in an
interval c x d.
Then the uniform
frequency function
has a rectangular
shape.

Probability Distribution for a

Uniform Random Variable x
Probability density function:

cd
Mean:
2

1
f (x)
dc

cxd

dc
Standard Deviation:
12

P a x b b a d c , c a b d

Uniform Distribution
Example
Youre production manager of a soft drink bottling
company. You believe that when a machine is set
to dispense 12 oz., it really dispenses between
11.5 and 12.5 oz. inclusive. Suppose the
amount dispensed has a uniform distribution.
What is the probability that less than 11.8 oz. is
dispensed?

Uniform Distribution Solution

1
1

d c 12.5 11.5
1
1.0
1

f(x)
1.0

11.5 11.8
P(11.5 x 11.8)

12.5

= (Base)/(Height)
= (11.8 11.5)/(1) = .30

Exponential Distribution
The length of time between emergency
arrivals at a hospital, the length of time
between breakdowns of manufacturing
equipment, and the length of time between
catastrophic events (e.g., a stockmarket
crash), are all continuous random
phenomena
we
want tobetween
describe
The length ofthat
time
ormight
the distance
probabilistically.
occurrences of random events like these
can often be described by the exponential
probability distribution. For this reason,
the exponential distribution is sometimes
called the waiting-time distribution.

Probability Distribution
for an Exponential Random
Variable x
Probability density function:
Mean:

Standard Deviation:

1 x
f (x) e

x 0

Finding the Area to the

Right of a Number a for an
Exponential Distribution

Exponential Distribution
Example
Suppose the length of time (in hours) between
emergency arrivals at a certain hospital is modeled as
an exponential distribution with = 2. What is the
probability that more than 5 hours pass without an
emergency arrival?
Mean: 2
Standard Deviation: 2

1
f (x) e

x 0

Exponential Distribution
Solution
Probability is the area A to
the right of a = 5.
A e

52

e2.5

From Table V:
A e2.5 .082085

Probability that more than 5

hours pass between emergency arrivals is about .08.

4.10

Sampling Distributions

Parameter & Statistic

A parameter is a numerical descriptive measure
of a population. Because it is based on all the
observations in the population, its value is
almost always unknown.
A sample statistic is a numerical descriptive
measure of a sample. It is calculated from the
observations in the sample.

Common Statistics & Parameters

Sample Statistic

Population Parameter

Mean

Standard
Deviation

Variance

s2

Binomial
Proportion

^
p

Sampling Distribution
The sampling distribution of a sample statistic
calculated from a sample of n measurements is
the probability distribution of the statistic.

Developing
Sampling Distributions
Suppose Theres a Population ...
Population size, N = 4
Random variable, x
Values of x: 1, 2, 3, 4
Uniform distribution

Population Characteristics
Summary Measure
N

xi
i1

2.5

Population Distribution
.3
.2
.1
.0

P(x)

All Possible Samples

of Size n = 2
16 Samples

16 Sample Means

1st 2nd Observation

Obs 1
2
3
4

1st 2nd Observation

Obs 1
2
3
4

1,1 1,2 1,3 1,4

1 1.0 1.5 2.0 2.5

2,1 2,2 2,3 2,4

2 1.5 2.0 2.5 3.0

3,1 3,2 3,3 3,4

3 2.0 2.5 3.0 3.5

4,1 4,2 4,3 4,4

4 2.5 3.0 3.5 4.0

Sample with replacement

Sampling Distribution
of All Sample Means
16 Sample Means
1st 2nd Observation
Obs 1
2
3
4

1 1.0 1.5 2.0 2.5

2 1.5 2.0 2.5 3.0
3 2.0 2.5 3.0 3.5
4 2.5 3.0 3.5 4.0

Sampling Distribution
of the Sample Mean
P(x)
.3
.2
.1
.0
1.0 1.5 2.0 2.5 3.0 3.5 4.0

Summary Measure of
All Sample Means
N

1.0 1.5 ... 4.0

X

2.5
N
16
i 1

Comparison
Population
.3
.2
.1
.0

Sampling Distribution

P(x)

2.5

P(x)
.3
.2
.1
.0
1.0 1.5 2.0 2.5 3.0 3.5 4.0

x 2.5

The Sampling Distribution

of a Sample Mean and the
Central Limit Theorem

Properties of the Sampling

Distribution of x
1. Mean of the sampling distribution equals mean of
sampled population*, that is,
x E x .
2. Standard deviation of the sampling distribution equals
Standarddeviationofsampledpopulation
Squarerootofsamplesize

.
That is, x
n

Standard Error of the Mean

The standard deviation x is often referred to
as the standard error of the mean.

Theorem 4.1
If a random sample of n observations is selected from
a population with a normal distribution, the sampling
distribution of x will be a normal distribution.

Sampling from
Normal Populations
Central Tendency
x

Population Distribution
= 10

Dispersion

x
n
Sampling with
replacement

= 50

Sampling Distribution
n=4
x = 5

n =16
x = 2.5
x- = 50

Standardizing the Sampling

Distribution of x
x x x
z

x
n

Sampling
Distribution

Standardized Normal
Distribution

= 1

=0

Thinking Challenge
Youre an operations analyst for
AT&T. Long-distance telephone calls
are normally distributed with = 8
min. and = 2 min. If you select
random samples of 25 calls, what
percentage of the sample means
would be between 7.8 & 8.2
minutes?

Sampling Distribution Solution*

x 7.8 8

.50

2
25
n
x 8.2 8
z

.50

2
Standardized Normal
25
n
Distribution
z

Sampling
Distribution

x = .4

=1
.3830
.1915 .1915

7.8 8 8.2 x

.50 0 .50

Sampling from
Non-Normal Populations
Central Tendency

Population Distribution
= 10

Dispersion

x
n
Sampling with
replacement

= 50

Sampling Distribution
n=4
x = 5

n =30
x = 1.8

x- = 50

Central Limit Theorem

Consider a random sample of n observations selected
from a population (any probability distribution) with
mean and standard deviation . Then, when n is
sufficiently large, the sampling distribution of x will be
approximately a normal distribution with mean x
and standard deviation x n . The larger the
sample size, the better will be the normal approximation
to the sampling distribution of x .

Central Limit Theorem

As sample
size gets
large
enough
(n 30) ...

x
n
sampling
distribution
becomes almost
normal.

Central Limit Theorem Example

The amount of soda in cans of a
particular brand has a mean of 12 oz
and a standard deviation of .2 oz. If
you select random samples of 50
cans, what percentage of the sample
means would be less than 11.95 oz?

Central Limit Theorem Solution*

x 11.95 12
z

1.77

.2
Sampling
Standardized Normal
n
50

Distribution

Distribution

x = .03

.0384

=1

.4616

11.95 12

1.77 0

Shaded area exaggerated

Key Ideas
Properties of Probability Distributions
Discrete Distributions
1. p(x) 0
2. p x 1
allx

Continuous Distributions
1. P(x = a) = 0
2. P(a < x < b) = area under curve between a and b

Key Ideas
Normal Approximation to Binomial
x is binomial (n, p)
P x a P z a .5

Key Ideas
Methods for Assessing Normality
1. Histogram

Key Ideas
Methods for Assessing Normality
2. Stem-and-leaf display
1

3389

245677

19

Key Ideas
Methods for Assessing Normality
3. (IQR)/S 1.3
4. Normal probability plot

Key Ideas
Generating the Sampling Distribution of x