Welcome back, everyone. So in previous videos, we've talked a lot about the different probabilities of certain events happening. We've also talked a lot about frequency distributions. We're basically gonna put those ideas together in this video, and we're gonna start talking about these things called random variables and probability distributions. This is really, really important, and we're gonna be talking a lot about these in the next couple of videos.
So I want to walk you through some key concepts and information you need to know, and then we'll do an example together. Let's get started. What is a random variable? A variable is just a letter that stands for a number. It's exactly what's going on here.
And the random part just means that it represents a single number determined by chance for each outcome of what we call an experiment. For example, let's say you go out and you enter a random raffle, and these are the number of prizes that you could win in that raffle. These are numbers, and they're determined entirely by chance. There's no skill involved. Alright?
Now there are basically two different types of random variables that you'll need to know. One is called a discrete random variable (DRV), and these are basically when the numbers cannot be broken down further. The classic example I like to use is a dice roll. Your outcomes are either 1, 2, 3, 4, 5, or 6. I can't roll a dice and get something like a 2.4.
That doesn't make any sense. Right? So that is a discrete random variable. The other kind is called a continuous random variable (CRV). This is basically the opposite.
These numbers can be broken down further. If you go out and you survey a bunch of people and measure their heights, you don't just get 72 or 75 inches. You can get all the numbers in between. And if you had powerful enough instruments, you could get into the decimals and things like that. You can break those numbers down even further. Alright?
So why is this all important? Well, basically, what's gonna happen in these problems is you're gonna be doing a bunch of experiments, and you'll organize the outcomes of that experiment with their associated probabilities. And this is what's called a probability distribution. It's basically a table, just like a frequency distribution, and it shows the probabilities of all the possible values that a random variable can be. Alright?
So here's how I like to think about this. It's actually very similar to a frequency distribution. We would go out and survey a bunch of random people. Let's say it was the number of cans of soda they drank per day. Here were your classes, and you would tally up all of their frequencies.
This is something that you're doing sort of after the fact. A probability distribution shows all of the different outcomes of an experiment and their probabilities. And usually, you use these things to predict the theoretical outcomes of this before it happens. That's kind of the idea here. Alright?
Now one of the very first things that you might have to do with a probability distribution is just verify that the sum of all probabilities is 1, and that's exactly what we're gonna do in this first example. So let's go ahead and get started here. So we're gonna verify this table meets the criteria of a probability distribution, and there are basically two criteria that you need to know. One of the things you'll notice is that all of these probabilities are decimals instead of percents. That's usually how you're gonna see them.
And, basically, the first criterion is that for any outcome of this experiment, so for any value of x, remember that's just your random variable, the probability has to be a number between 0 and 1. You can't have an outcome that represents a 110% probability because that doesn't make any sense. Alright? So that's the first criterion. And if you go ahead and look through these numbers, all of these numbers are just decimals that are between 0 and 1.
So that's the first criterion, and this is definitely met. What about the second one? The second one is that when you add up all of the different possible probabilities for all of the outcomes, that sum, remember that's big sigma over here, has to be 1. So, in other words, it has to be a 100%. Think about it.
If I enter this raffle and all of my outcomes are either 0, 1, 2, 3, or 4, that represents all the possible outcomes and therefore the probability has to be a 100% for any of those things or all of those things combined happening. Alright? So, basically, all of these numbers have to be between 0 and 1, but they have to add up to 1. Alright? So let's go ahead and make sure that this second criterion is met.
Just go ahead and add up all the probabilities, 0.10, 0.20, 0.40, 0.20, and then 0.10. Alright? If you go ahead and add all of these things up, what you should find is that this is a number that equals 1. So in other words, this is a probability distribution. If you added up all of these numbers and you did not get 1, you got something that was significantly less or greater than, then this would not be a probability distribution.
Alright? So that's basically it for probability distributions. Let's go ahead and take a look at our second example here. Alright? So we're gonna be asked to play a random lottery, and we're going to pay $1 to enter this lottery, and we have the profits and probabilities organized. So in other words, these are the outcomes, and these are the associated probabilities. Okay? So let's take a look at the first question here.
What is the missing probability in the table? You'll notice that in this column, one of these numbers is actually missing over here, and we actually don't know what that is. Can we actually find that? Well, the idea here is that, remember, all of the different outcomes have to add up to a 100%. So all of the outcomes of the probabilities, right?
That's the sum of px. Okay? So what we can use here is if all of these things have to add up to 1, oh sorry. All these have to add up to 1, right?
100%, which equals 1. So in other words, basically, what happens is the probability that you have a $5 profit is basically just going to be 1 minus everything else. Right? It's going to be 1 minus all of the other probabilities. 0.40 plus so this is actually going to I'm going to put this in parentheses.