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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.
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:
Hence,wehavethefollowingequivalentprobabilities:
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
ThezTable
Theareasunderthecurveboundedbytheordinatesz = 0andanypositivevalueofzarefoundinthezTable.Fromthis
tabletheareaunderthestandardnormalcurvebetweenanytwoordinatescanbefoundbyusingthesymmetryofthe
curveaboutz = 0.WecanalsouseScientificNotebook,asweshallsee.
GoherefortheactualzTable.
Example3
Findtheareaunderthestandardnormalcurveforthefollowing,usingtheztable.Sketcheachone.
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(b)betweenz = -0.56andz = 0
(e)totherightofz = -1.33.
Answer
Example4
Findthefollowingprobabilities:
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)
= 0.3413 + 0.4332
= 0.7745
Sotheprobabilityis0.7745.
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(b)20.06is0.5standarddeviationsabovethemean
20.07is1standarddeviationabovethemean
= 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),
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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= 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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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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