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Variance and Mean of A Distribution Powerpoint Presentation

powerpoint presentation about mean and variance distribution Topics discrete uniform distribution continuous distribution expected value variance standard deviation

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451 views

Variance and Mean of A Distribution Powerpoint Presentation

powerpoint presentation about mean and variance distribution Topics discrete uniform distribution continuous distribution expected value variance standard deviation

Uploaded by

Nikka Veron
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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MEAN AND

VARIANCE OF A
DISTRIBUTION

Discrete Uniform Distribution


Discrete

Uniform Distributionis
aprobability distributionwhereby a
finitenumberofequallyspacedvalues
are equally likely to be observed;
every one ofnvalues has equal
probability1/n.

A simple example of the discrete

uniform distribution is throwing a


fairdie.

Continuous Uniform Distribution


Continuous

Uniform

Distribution

orRectangular Distributionis a family of


probability distributionssuch that for each
memberofthefamily,allintervalsofthesame
lengthonthedistribution'ssupportareequally
probable.

Example -Uniform
Distribution
The uniform distribution: all values are equally likely.
f(x)= 1, for 1 x 0
p(x)
1

We can see its a probability distribution because it


integrates to 1 (the area under the curve1 is 1): 1

1 x
0

1 0 1

Example: Uniform
Distribution
Whats the probability that x is between 0 and ?
p(x)
1

P( x 0)=

Expected Value and Variance


All

probability distributions are


characterized by an expected value
(mean) and a variance (standard
deviation squared).

Expected

value is an extremely
useful concept for good decisionmaking!

Example: The Lottery


A certain lottery works by picking 6

numbers from 1 to 49. It costs $1.00


to play the lottery, and if you win,
you win $2 million.

If you play the lottery once, what are

your expected winnings or losses?

Lottery
Calculate the probability of winning in 1 try:
1
49

49 choose 6

1
1

7.2 x 10 -8
49! 13,983,816
43!6!

The probability function (note, sums to 1.0):

Out of 49 numbers,
this is the number of
distinct combinations
of 6.

x$

p(x)

-1

.999999928

+ 2 million

7.2 x 108

Expected Value
The probability function
x$

p(x)

-1

.999999928

+ 2 million

7.2 x 108

Expected Value
E(X) = P(win)*$2,000,000 + P(lose)*-$1.00
= 2.0 x 106 * 7.2 x 10-8+ .999999928 (-1) = .144 - .999999928
= -$.86

Negative
expected value is never good!
You shouldnt play if you expect to lose money!

Expected Value
If you play the lottery every week for 10 years,
what are your expected winnings or losses?

Expected Value
If you play the lottery every week for 10 years,
what are your expected winnings or losses?
520 x (-.86) = -$447.20

Expected Value of a
Random Variable
Expected value is just the average or

mean () of random variable x.


Its

sometimes called a weighted


average because more frequent values
of X are weighted more highly in the
average.

Its also how we expect X to behave on-

average over the long run (frequentist


view again).

Expected Value
Discrete Case:

E( X )

x p(x )
i

all x

Continuous Case:

E( X )

xi p(xi )dx

all x

Symbol Interlude
E(X) =
These symbols are used

interchangeably

Example: Expected Value


Consider the following Probability

Distribution:
x

10

11

12

13

14

P(x)

.4

.2

.2

.1

.1

x p( x) 10(.4) 11(.2) 12(.2) 13(.1) 14(.1) 11.3


i

i 1

Example - Expectation
One thousand tickets are sold at
$1 each for a colour television
valued

at

$500.

What

is

the

Expected Value of gain if a person


purchases one ticket ?

Example - Expectation
One thousand tickets are sold at
$1 each for four prizes of $100, $50,
$25 and $10. What is the Expected
Value of winning a prize if a person
purchases two tickets ?

Variance/Standard Deviation
2 = Var(x) = E(x-)2
The

expected (or average) squared


distance (or deviation) from the
mean

Var ( x) E[( x ) ] ( xi ) p(xi )


2

all x

Variance
Discrete Case:

Var ( X )

(x

) p(xi )
2

all x

Continuous Case:

Var ( X )

( xi ) p(xi )dx

all x

Symbol Interlude
Var(X)= 2
SD(X) =
these symbols are used

interchangeably

Practice Problem
It costs $1.00 to play the
lottery. The probability of winning
the lottery is 18/38 and losing the
lottery is 20/38. The mean (already
calculated) is -$.053. Whats the
variance of X ?

Practice Problem

2

(x )

p(xi )

all x
(1 .053) 2 (18 / 38) (1 .053) 2 (20 / 38)

(1.053) 2 (18 / 38) (1 .053) 2 (20 / 38)


(1.053) 2 (18 / 38) (.947) 2 (20 / 38)
.997

.997 .99
Standard deviation is $.99. Interpretation: On average,
youre either 1 dollar above or 1 dollar below the mean,
which is just under zero. Makes sense!

Theorem
The variance of a random variable
X is
2 = E(X2) - 2
OR

2 = E(X2) [E(X)]2

Example
Let the random variable X represent the
number of defective parts for a machine
when 3 parts are sampled from a production
line and tested. Calculate Variance of the
following Probability Distribution of X.

x
f(x)

0
0.51

1
0.38

2
0.10

3
0.01

Problem 1
Findthemeanandthevarianceof
therandomvariableXwithprobability
functionordensityf(x):
f(x)=2x,(0x1)

Problem 3
Findthemeanandthevarianceof
therandomvariableXwithprobability
functionf(x):
X=Numberafairdieturnsup

Problem 5
Findthemeanandthevarianceof
therandomvariableXwithprobability
functionordensityf(x):
Uniformdistributionon[0,8]

Uniform Distribution
f(x) =

1/b-a
0

axb
Otherwise

F(x) =

x-a/b-a a x b
0
Otherwise

Problem 7
What is the expected daily profit, if
astoresellsXairconditionersperday
withprobabilityf(10)=0.1,f(11)=0.3,
f(12) = 0.4, f(13) = 0.2, and profit per
airconditioneris$55?

Problem 9
If the mileage (in multiples of 1000
miles)afterwhichatyremustbereplaced
is given by the random variable X with
density f(x) = e-x (x > 0). What mileage
can you expect to get on one of these
tyres? Also find the probability that a tyre
willlastatleast40,000miles.

Problem 11
A small filling station is supplied with
gasoline

every

Saturday

afternoon.

Assume that its volume X of sales in ten


thousands of gallons has the probability
densityf(x)=6x(1x),if0x1and0
otherwise. Determine the mean, variance
andthestandardizedvariable.

Standardized Random Variable


Z=X-

Std Rand Variable = X - Mean


Std Deviation

Problem 13
LetX[cm]bethediameterofboltsina
production.AssumethatXhasthedensity
f(x)=k(x0.9)(1.1x)if0.9<x<1.1
and 0 otherwise. Determine k, sketch f(x),
andfindand2.

ASSIGNMENT NO 1
Briefly describe following with the help of examples:
Role of Probability
Relation between Probability and Statistical

Inference
Random Sampling
Bayes Rule
Joint Probability Distribution
Hand Written assignments be submitted by 15 Nov

2012.
Copying and Late Submissions will have appropriate
penalty.

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