Probability (L1)

1. Mark each statement True or False. If you believe that a statement is false, briefly say
why you think it is false. Exercises 1116. A market research assistant watches the
next five customers as they leave the store. He records whether the customer is
carrying a store bag that indicates the customer made a purchase. He writes down a
yes or a no for each. Define the events.
A = {first two shoppers have a bag}
B = {last two shoppers have a bag}
C = {last three shoppers have a bag}
(a) Find the sample space S for this experiment.
(b) P(A) + P(B) = P(A or B) : TRUE or FALSE
(c) The probability that both events B and C occur is equal to P(B): TRUE or FALSE
2. The probability that a randomly chosen customer purchases with a credit card or
spends more than $50 is the same as or larger than the probability that the customer
purchases with a credit card and spends more than $50.
3. The Human Resources (HR) group at a large accounting firm interviews prospective
candidates for new hires. After each interview, the firm rates the candidate on a 10-
point scale, with the rating 10 denoting exceptionally good candidates and 1 denoting
those that the firm rates poor. The HR group rated 6 candidates on Monday and 6
candidates on Tuesday. The outcomes of these 12 ratings form the sample space.
(a) The events A = {3 candidates on Monday rate above 7} and B = {two candidates
on Tuesday rate above 7} are disjoint events.
(b) If 8 of the 12 candidates on Monday and Tuesday rate above 6, then the
probability of a candidate rating above 6 on Wednesday is 8>12.
(c) The HR group has monitored the outcome of these interviews for several years.
The Law of Large Numbers assures us that HR personnel can use these data to
learn the probability of a candidate scoring above 8 during an interview.
(d) The probability that the ratings of the six candidates on Monday are {6, 4, 3, 8, 11,
8} is zero.
(e) Define the events A = {6 out of the 12 candidates rate 8 or better}, B = {3 out of
the 6 candidates on Monday rate 8 or better}, and C = {3 out of the 6 candidates
on Tuesday rate 8 or better}.
 (f) Define the events A = {first candidate is rated 8, 9, or 10} and B = {first candidate
is rated 5, 6, or 7}. Then P(A or B) = P(A) + P(B).
4. A shopper in a convenience store can make a food selection from frozen items,
refrigerated packages, fresh foods, or deli tems. Let the event A = {frozen,
refrigerated, fresh} and B = {fresh, deli}.
(a) Find the intersection A and B.
(b) Find the union of A and B.
(c) Find the event Ac.
5. A credit-rating agency assigns ratings to corporate bonds. The agency rates bonds
offered to companies that are most likely to honor their liabilities AAA. The ratings
fall as the company becomes more likely to default, dropping from AAA to AA, A,
down to BBB, BB, B, CCC, CC, R, and then D (for in default). Let the event W =
{AAA, AA, A, BBB, BB, B} and V = {BBB, BB, B, CCC, CC}.
a. Find the intersection W and V.
b. Describe the union W or V.
c. Find the complement (W or V)c.
6. Two dice are thrown. Let E be the event that the sum of the dice is odd, let F be the
event that at least one of the dice lands on 1, and let G be the event that the sum is 5.
Describe the events EF, EUF, FG, EFc and EFG.
7. A pair of fair dice is rolled. What is the probability that the first die lands on a higher
value than does the second.
8. A basketball team is down by 2 points with only a few seconds remaining in the game.
Theres a 50% chance that the team will be able to make a 2-point shot and tie the game,
compared to a 30% chance that it will make a 3-point shot and win. If the game ends in
a tie, the game continues to overtime. In overtime, the team has a 50% chance of
winning. What should the coach do, go for the 2-point shot or the 3-point shot? Be sure
to identify any assumptions you make.
9. You take a quiz with six multiple-choice questions. After you studied, you estimated
that you would have an 80% chance of getting any individual question right. What are
your chances of getting them all right, assuming that one hard question does not confuse
you and cause you to miss others?
10. According to USA Today, 65% of Americans are overweight or obese. If five
Americans are chosen at random, what is the probability that at least one of them is
overweight or obese?
11. The chancellor of a state university is applying for a new position. At a certain point in
his application process, he is being considered by seven universities. At three of the
seven he is a finalist, which means that (at each of the three universities) he is in the
final group of three applicants, one of which will be chosen for the position. At two of
the seven universities he is a semifinalist, that is, one of six candidates (in each of the
two universities). In two universities he is at an early stage of his application and
believes there is a pool of about 20 candidates for each of the two positions. Assuming
that there I s no exchange of information, or influence, across universities as to their
hiring decisions, and that the chancellor is as likely to be chosen as any other applicant,
what is the chancellors probability of getting at least one job offer?
12. A package of documents needs to be sent to a given destination, and delivery within
one day is important. To maximize the chances of on-time delivery, three copies of the
documents are sent via three different delivery services. Service A is known to have a
90% on-time delivery record, service B has an 88% on-time delivery record, and service
C has a 91% on-time delivery record. What is the probability that at least one copy of
the documents will arrive at its destination on time?
13. The projected probability of increase in online holiday sales from 2004 to 2005 is 95%
in the United States, 90% in Australia, and 85% in Japan. Assume these probabilities
are independent. What is the probability that holiday sales will increase in all three
countries from 2004 to 2005?
14. An electronic device is made up of two components A and B such that the device would
work satisfactorily as long as at least one of the components works. The probability of
failure of component A is 0.02 and that of B is 0.1 in some fixed period of time. If the
components work independently, find the probability that the device will work
satisfactorily during the period.
15. A recent survey conducted by Towers Perrin and published in the Financial Times
showed that among 460 organizations in 13 European countries, 93% have bonus plans,
55% have cafeteria-style benefits, and 70% employ home-based workers. If the types
of benefits are independent, what is the probability that an organization selected at
random will have at least one of the three types of benefits?
16. Credit derivatives are a new kind of investment instrument: they protect investors from
risk.9 If such an investment offered by ABN Amro has a 90% chance of making money,
another by AXA has a 75% chance of success, and one by the ING Group has a 60%
chance of being profitable, and the three are independent of each other, what is the
chance that at least one investment will make money?
17. In problem 242, suppose that American investment institutions enter this new market,
and that their probabilities for successful instruments are:
Goldman Sachs 70%
Salomon Brothers 82%
Fidelity 80%
Smith Barney 90%
What is the probability that at least one of these four instruments is successful?
Assume independence.
18. Ayesha was waiting for her husband John to take her to the gift shop for the anniversary
gift. John promised a diamond necklace this time. Upon reaching the shop Ayesha
selected three necklaces of which two are priced Rs 30000 and the other Rs 80000. The
boxes of the ornaments were identical. John wanted to have some fun. He placed the
necklaces within the boxes and closed them while Ayesha was looking away for some
other stuff. When Ayesha returned, John suggested his wife to select one box randomly.
Once she did he opened one box with the lesser value and asked you may change the
box you have selected or retain- but whatever turns out is yours. What do you suggest
Ayesha- should she change or not?