ProblemsforSession1

1.Simpsonsparadox,ortheYuleSimpsoneffect,isaparadoxinwhichatrendthatappears
indifferentgroupsofdatadisappearswhenthesegroupsarecombined,andthereversetrend
appearsfortheaggregatedata.Considerthefollowingexample:
Abracadabra University is wellknown for its bias against women. Last year 3000 applicants
applied to join the undergraduate programme of the university, among them 2000 were men
and1000women.100womenwereshortlisted(10%),alongwith300men(15%).Aclearcaseof
sexualbiasisapparent.Infact,thathasbeenthetrendforyears.
What,however,bafflestheuniversityauthorityisthattheygaveclearinstructiontobothofits
twoschools,ArtsandScience,totrytoadmitmorewomen,andtheydidtrytooblige.Sowhat
happened?Letsexaminetheadmissionofferslastyear:
Men
295accepted/1900applied
5accepted/100applied

Arts
Science

Women
10accepted/50applied
90accepted/950applied

a) Compute and compare the proportion of men and women admitted to the Schools of Arts
andScience:i.e.compute
i)WhatistheprobabilitythatarandommaleapplicantgetsselectedintheSchoolofArts?
ii)WhatistheprobabilitythatarandomfemaleapplicantgetsselectedintheSchoolofArts?
iii)WhatistheprobabilitythatarandomapplicantgetsselectedintheSchoolofArts?
iv)WhatistheprobabilitythatarandommaleapplicantgetsselectedintheSchoolofScience?
v)WhatistheprobabilitythatarandomfemaleapplicantgetsselectedintheSchoolofScience?
vi)WhatistheprobabilitythatarandomapplicantgetsselectedintheSchoolofScience?
Basedoni)vi)above,canyouexplainwhatisgoingon?Isthecriticismtowardstheuniversity
justifiable?Whatisyourtakeonthisanalysis?
2. Someone throws a pair of fair dice. True or false: the chance of getting at least one six is
1

3.Isanythingwrongwiththefollowingargument?20%oftheIndiansareseniorcitizens,45%of
theIndiansarewomen.Sotheproportionofwomenseniorcitizensis45%of20%=9%.
4. In a psychology experiment, each subject is presented 3 ordinary cards, face down. The
subjecttakesoneofthosecards.Thesubjectalsotakesonecardatrandomfromaseparate,full,
deck of 52 cards. If the two cards are from the same suit (Heart/Diamond/Club/Spade), the
subjectwinsaprize.Whatisthechanceofwinning?

ProblemsforSession2
1.ScottMyersisasecurityanalystforatelecommunicationsfirmcalledWebtalk.Althoughheis
optimisticaboutthefirmsfuture,heisconcernedthatitsstockpricewillbehugelyaffectedby
the condition of credit flow in the economy. He believes that the probability is 0.2 that credit
flow will improve significantly, 0.5 that it will improve only marginally and0.3 that it would
notimproveatall.HealsoestimatesthattheprobabilitythatthestockpriceofWebtalkwillgo
up by at least 20% is 0.9 with significant improvement in credit flow, 0.4 with marginal
improvementincreditflowand0.1withnoimprovementincreditflow.
a)WhatistheunconditionalprobabilitythatthestockpriceofWebtalkgoesupbyatleast20%?
b) Given that the stock price of Webtalk has not gone up by more than 20%, what is the
probabilitythattherewasnoimprovementincreditflow?
2.Mektek,anewcompany,isthinkingaboutdevelopingasmartphone.However,beforethey
start developing the smartphone, they want to make sure that it will make sense to invest on
this.Theyareplanningtoemployamarketsurveyfarmtosensethemarket.Thefollowingare
theconsiderations:
The market survey can predict 3 scenarios: high, medium or low demand. In a high demand
situation, Mektek makes a profit of Rs. 10,00,00,000 (10 Crores). In case of medium demand,
they make a profit of Rs. 1,00,00,000 (1 Crore), and in case of a low demand, they lose Rs.
2,00,00,000(2Crores).
Theprobabilitieswithwhichthemarketsurveywillpredicthigh,mediumorlowdemandare
40%, 20% and 40% respectively. The problem is that historically when such a survey had
predictedhighdemands,40%ofthetimeitwerewrong,halfofsuchcasesinfactbeingthatof
low demand, and rest of medium demand. Similarly, when such a survey predicted medium
demand,itwascorrectonly70%ofthetimes,withrestofthecasesbeingsplitequallybetween
highandlowdemand.Thesurvey,however,hasworkedwellincasewhentherewasactuallya
low demand scenario; it was correct 90% of the times in such a case, the rest of the cases all
beingofmediumdemand.
a) What is the probability that Mektek will make a profit given that the market survey has
predictedalowdemandscenario?
b)Whatisthe(unconditional)probabilitythatMektekwillmakealoss?
c) What is the probability that Mektek will make a loss given that the market survey has not
predictedalowdemandscenario?

ProblemsforSession34
1.Agamblingguiderecommendsthefollowing``winningstrategytomakemoneyinthegame
ofroulette.ItrecommendsthatagamblerbetRs.100onred.Ifredappears,thenthegambler
shouldtakethemoneyandquit.Ifheloses,thenheshouldbetRs.100onredforthenexttwo
spinsandthenquit.NotethatP(red)=9/19.NotethatifbettingRs.100meansthatyoupaythe
casinoRs.100toplay;ifyouwinyougetbackyourRs.100plusanotherRs.100,butifyoulose
then the casino keeps your payment. Let X be the gamblers winnings when he quits. Find
P(X>0)andE(X)andcommentonthestrategy.
2. a) An average CFL is supposed to last for 1 year, where the SD is 2months. Assume the
lifetimeisdistributednormally.Findtheprobabilitythat
i)ACFLbulblastfor16monthsormore.
ii)Amongthe5CFLbulbsIhaveinmyhouse,atleast4lastfor16monthsormore.
3.Accordingtoajobwebsite,everymontharound20,000peopleregisterintheirwebsite,and
about 60% of them get placed within two weeks. Assuming that each person gets placed
independentlywithprobability0.6withintwoweeks,whatistheprobabilitythatatleast13,000
peoplegetplacedwithintwoweeks?Whatabout15,000?
4. A waiter believes that his tips from various customers have a slightly right skewed
distributionwithameanof100andstandarddeviationof25.
a) With the above information, can we obtain the exact probability, or a reasonable
approximation,thattheaveragetipfrom15customerswillbeatleast105?Whyorwhynot?
b)Whatistheapproximateprobabilitythattheaveragetipfrom100customerswillbeatleast

105?
c)Whatistheapproximateprobabilitythattheaveragetipfrom100customerswillbebetween

98and105?
5. Let X1, X2, ..., X100 be independent observations from a distribution which is not normal.
Suppose it is known that the mean of this distribution is 55 and the standard deviation is 7.
Whatcanwesayaboutthesamplemean X ?
a) X =55
b) X isapproximatelynormalwithmean55andstandarderror7
c) X isapproximatelynormalwithmean55andstandarderror0.7
d) X isapproximatelynormalwithmean55andstandarderror0.07
e)Distributionof X cannotbeapproximatedbythenormaldistributionsinceXisnotnormal.

ProblemsforSessions5
1. Suppose you want to know the proportion of IIMN PGP students who will go for a movie
during the next weekend. Accordingly you select your close friends in your section and ask
themabouttheirplans.
a)Whatkindofstudyareyouconducting?
i)

Experiment

ii) Simplerandomsampling
iii) ObservationalStudy
iv) Noneoftheabove

b)Whatcanbeapossiblesourceofbiasinyourstudy?
i)

Samplingbias

ii) Nonresponsebias
iii) Responsebias
iv) Alloftheabove

2. For each of the following studies, explain whether an experiment or observational study
wouldbemoreappropriate:
a)Whetherornotsmokinghasaneffectoncoronaryheartdisease:
b)WhetherclassXscorestendtobepositivelyassociatedwithCATscores:
c)Whetherornotaspecialcouponattachedtotheoutsideofacataloguemakesrecipientsmore
likelytoorderproductsfromamailordercompany:
d)WhetherlongerhoursdoingFacebooktendtobenegativelyassociatedwithlowergrades:
e)WhetherornottakingAspirincanreduceheartattacks:
3.Supposefollowingarethevaluesinsomepopulation:5,27,4,17,4.5,19,2,11,3,6,13,18.A
sample of size 4 is taken, and is observed to be 3, 4, 4.5, 2. Is it most likely to be (a) a simple
randomsample,(b)astratifiedsampleor(c)aclusteredsample?Givereasonforyouranswer.