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3/1/2016 14.

NormalProbabilityDistributions

InteractiveMathematics

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HomeCountingandProbability14.NormalProbabilityDistribution

14.NormalProbabilityDistributions
TheNormalProbabilityDistributionisverycommoninthefieldofstatistics.

Wheneveryoumeasurethingslikepeople'sheight,weight,salary,opinionsorvotes,thegraphoftheresultsisveryoften
anormalcurve.

TheNormalDistribution
ArandomvariableXwhosedistributionhastheshapeofanormalcurveiscalledanormalrandomvariable.

NormalCurve

ThisrandomvariableXissaidtobenormallydistributedwithmeanandstandarddeviationifitsprobability
distributionisgivenby
1 2 2
f (X ) = e(x) /2
2

PropertiesofaNormalDistribution
1.Thenormalcurveissymmetricalaboutthemean

2.Themeanisatthemiddleanddividestheareaintohalves

3.Thetotalareaunderthecurveisequalto1

4.Itiscompletelydeterminedbyitsmeanandstandarddeviation(orvariance 2)

Note:

Inanormaldistribution,only2parametersareneeded,namelyand 2.

AreaUndertheNormalCurveusingIntegration
TheprobabilityofacontinuousnormalvariableXfoundinaparticularinterval[a, b]istheareaunderthecurvebounded
byx = aandx = bandisgivenby
b
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b
P (a < X < b) = f (X ) dx
a

andtheareadependsuponthevaluesofand.

[SeeAreaunderaCurveformoreinformationonusingintegrationtofindareasundercurves.Don'tworrywedon'thave
toperformthisintegrationwe'llusethecomputertodoitforus.]

TheStandardNormalDistribution
Itmakeslifealoteasierforusifwestandardizeournormalcurve,withameanofzeroandastandarddeviationof1
unit.

Ifwehavethestandardizedsituationof = 0and = 1,thenwehave:

1 x2 /2
f (X ) = e
2

StandardNormalCurve = 0, = 1

WecantransformalltheobservationsofanynormalrandomvariableXwithmeanandvariancetoanewsetof
observationsofanothernormalrandomvariableZwithmean0andvariance1usingthefollowingtransformation:

X
Z=

Wecanseethisinthefollowingexample.

Example1
1
Say = 2and = inanormaldistribution.
3
Thegraphofthenormaldistributionisasfollows:

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1
= 2, =
3
Thefollowinggraphrepresentsthesameinformation,butithasbeenstandardizedsothat = 0 and = 1:

= 0, = 1

Thetwographshavedifferentand,buthavethesameshape(ifwetweaktheaxes).

ThenewdistributionofthenormalrandomvariableZwithmean0andvariance1(orstandarddeviation1)iscalleda
standardnormaldistribution.Standardizingthedistributionlikethismakesitmucheasiertocalculateprobabilities.

FormulafortheStandardizedNormalDistribution
X
Ifwehavemeanandstandarddeviation,thenZ =

SinceallthevaluesofXfallingbetweenx1andx2havecorrespondingZvaluesbetweenz1andz2,itmeans:

TheareaundertheXcurvebetweenX = x1andX = x2equalstheareaundertheZcurvebetween


Z = z1andZ = z2.

Hence,wehavethefollowingequivalentprobabilities:

P(x1 < X < x2) = P(z1 < Z < z2)

Example2
1
Consideringourexampleabovewhere = 2, = ,then
3

1
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1
Onehalfstandarddeviation= = ,and
2 6
2
Twostandarddeviations=2 =
3
1 13 1
So s.d.(standarddeviation)to2s.d.totherightof = 2willberepresentedbytheareafromx1 = = 2 to
2 6 6
8 2
x2 = = 2 .Thisareaisgraphedasfollows:
3 3

= 2, = 1/3

Theareaaboveisexactlythesameasthearea

z1 = 0.5toz2 = 2

inthestandardnormalcurve:

= 0, = 1

PercentagesoftheAreaUndertheStandardNormalCurve
Agraphofthisstandardized(mean0andvariance1)normalcurveisshown.

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Inthisgraph,wehaveindicatedtheareasbetweentheregionsasfollows:

-1 Z 1 68.27%

-2 Z 2 95.45%

-3 Z 3 99.73%

Thismeansthat68.27%ofthescoresliewithin1standarddeviationofthemean.
1 1 z 2 /2
Thiscomesfrom: e dz = 0.68269
1 2

Also,95.45%ofthescoresliewithin2standarddeviationsofthemean.
2 1 z 2 /2
Thiscomesfrom: e dz = 0.95450
2 2

Finally,99.73%ofthescoresliewithin3standarddeviationsofthemean.
3 1 z 2 /2
Thiscomesfrom: e dz = 0.9973
3 2

Thetotalareafrom < z < is1.

ThezTable
Theareasunderthecurveboundedbytheordinatesz = 0andanypositivevalueofzarefoundinthezTable.Fromthis
tabletheareaunderthestandardnormalcurvebetweenanytwoordinatescanbefoundbyusingthesymmetryofthe
curveaboutz = 0.WecanalsouseScientificNotebook,asweshallsee.

GoherefortheactualzTable.

Example3

Findtheareaunderthestandardnormalcurveforthefollowing,usingtheztable.Sketcheachone.

(a)betweenz = 0andz = 0.78

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(b)betweenz = -0.56andz = 0

(c)betweenz = -0.43 andz = 0.78

(d)betweenz = 0.44andz = 1.50

(e)totherightofz = -1.33.

Answer

Example4
Findthefollowingprobabilities:

(a)P(Z > 1.06)

(b)P(Z < -2.15)

(c)P(1.06 < Z < 4.00)

(d)P(-1.06 < Z < 4.00)

Answer

Example5

Itwasfoundthatthemeanlengthof100partsproducedbyalathewas20.05mmwithastandarddeviationof
0.02mm.Findtheprobabilitythatapartselectedatrandomwouldhavealength

(a)between20.03mmand20.08mm

(b)between20.06mmand20.07mm

(c)lessthan20.01mm

(d)greaterthan20.09mm.

Answer

X=lengthofpart

(a)20.03is1standarddeviationbelowthemean

20.08 20.05
20.08is = 1.5standarddeviationsabovethemean.
0.02
P (20.03 < X < 20.08)

= P (1 < Z < 1.5)

= 0.3413 + 0.4332

= 0.7745

Sotheprobabilityis0.7745.

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(b)20.06is0.5standarddeviationsabovethemean

20.07is1standarddeviationabovethemean

P (20.06 < X < 20.07)

= P (0.5 < Z < 1)

= 0.3413 0.1915

= 0.1498

Sotheprobabilityis0.1498.

(c)20.01is2s.d.(standarddeviations)belowthemean.

P (X < 20.01)

= P (Z < 2)

= 0.5 0.4792

= 0.0228

Sotheprobabilityis0.0228.

(d)20.09is2s.d.abovethemean,sotheanswerwillbethesameas(c),

P (X > 20.09) = 0.0228.

Example6

Acompanypaysitsemployeesanaveragewageof$3.25anhourwithastandarddeviationof60cents.Ifthewagesare
approximatelynormallydistributed,determine

a.theproportionoftheworkersgettingwagesbetween$2.75and$3.69anhour
b.theminimumwageofthehighest5%.

Answer

X=wage
2.75 3.25
(a)Z 1 = = 0.83333
0.6
3.69 3.25
Z2 = = 0.73333
0.6
So

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P (2.75 < X < 3.69)

= P (0.833 < Z < 0.733)

= 0.298 + 0.268

= 0.566

Soabout56.6%oftheworkershavewagesbetween$2.75and$3.69anhour.

(b)W=minimumwageofhighest5%

z = 1.645(fromtable)
x 3.25
= 1.645
0.6
Solvinggives:x = 4.237

Sotheminimumwageofthetop5%ofsalariesis$4.24.

Example7

Theaveragelifeofacertaintypeofmotoris10years,withastandarddeviationof2years.Ifthemanufactureriswilling
toreplaceonly3%ofthemotorsthatfail,howlongaguaranteeshouldheoffer?Assumethatthelivesofthemotors
followanormaldistribution.

Answer

X=lifeofmotor
x=guaranteeperiod

NormalCurve: = 10, = 2

Weneedtofindthevalue(inyears)thatwillgiveusthebottom3%ofthedistribution.Thesearethemotorsthatwe
arewillingtoreplaceundertheguarantee.

P (X < x) = 0.03
Theareathatwecanfindfromtheztableis

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0.5 0.03 = 0.47

Thecorrespondingzscoreisz = 1.88.

x
SinceZ = ,wecanwrite:

x 10
= 1.88
2
Solvingthisgivesx = 6.24.

Sotheguaranteeperiodshouldbe6.24years.

ApplicationTheStockMarket
Sometimes,stockmarketsfollowanuptrend(ordowntrend)within2standarddeviationsofthemean.Thisiscalled
movingwithinthelinearregressionchannel.

HereisachartoftheAustralianindex(theAllOrdinaries)from2003toSep2006.

Imagesource:incrediblecharts.com.

Theuppergraylineis2standarddeviationsabovethemeanandthelowergraylineis2standarddeviationsbelowthe
mean.

NoticeinApril2006thattheindexwentabovetheupperedgeofthechannelandacorrectionfollowed(themarket
dropped).

Butinterestingly,thelatterpartofthechartshowsthattheindexonlywentdownasfarasthebottomofthechanneland
thenrecoveredtothemean,asyoucanseeinthezoomedviewbelow.Suchanalysishelpstradersmakemoney(ornot
losemoney)wheninvesting.

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Imagesource:incrediblecharts.com.

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