PROBABILITY

Mutually Exclusive Event

1. A market survey conducted in four cities pertained to preference for brand A soap. The
response are shown below in the table:
Response Delhi Kolkata Chennai Mumbai total
Yes 45 55 60 50 210
No 35 45 35 45 160
No option 5 5 5 5 20
Total 85 105 100 100 390

I. What is the probability that a consumer at random prefers brand A?

= 210/390= 0.53
II.What is the probability that a consumer prefers brand A and from Chennai?
= 60/210 =0.28
III.What is the probability that a consumer prefers brand A given that he was from Chennai?
= 0.15/0.25 = 0.6
IV.What is the probability that a consumer was from Mumbai given that he prefers brand A?
= 0.12/0.53 = 0.22

2. An educational institution has offered admission to 100 students. On an average, the

Institution found 20 students secure Grad ‘A’ 25 students grade ‘B’, 20 students grade ‘C’
and remaining students grade ‘D’. what is the probability of selecting students who has (i)
either grade A or B (ii) either grade C or D

(i) => P(A U B) = P(A)+P(B)-P(A int. B)

= 0.2+0.25-0 = 0.45 (Since mutually exclusive event P(A int. B)
=0
(ii) => P(C U D) = P(C)+P(D)-P(C int. D)
=0.2+0.35-0 = 0.5 (Since mutually exclusive event P(A int.
B) = 0

Not mutually Exclusive Event

1. In a group of 200 university students, 140 are full-time(80 female and 60male)students and
60 part-time (40 female and 20 males ) students. This break-up of students is shown below:
 200 University Students Total
Full-Time Part-Time
Males 60 20 80
Females 80 40 120
Total 140 60 200
Two event pertaining to this selection, are defined as below:
Event A: the student selected is full-time
Event B: the student selected is part-time and male
Event C: the student selected is female
Question: Find the probability that the student selected is full-time or female
P(A U C) = P(A)+P(C)- P(A int. C)
= 07+0.6-0.4
= 0.9
2. There are 20,30 and 50 heavy smokers(chain smokers), moderate smokers (once or twice in a
day) and non-smokers respectively. Construct a frequency table and illustrate three rules of
Probability.

Solution:
Frequency Relative frequency(probability)
Heavy Smokers(H) 20 0.2
moderate smokers(M) 30 0.3
Non-smokers(N) 50 0.5
Total 100 1

Rule 1: Probability of happening of an event and Probability of not happening

of an event is always equal to ONE (1).
P(H) = 20/100 = 0.2
P(𝐻 ) = 80/100 = 0.8
P(H) + P(𝐻) = 0.2 +0.8
=1
RULE 2: Probability of an event always lies between 0 and 1.
 P(H) = 0.2
P(M))= 0.3
P(N)= 0.5
RULE 3: Probability of an event can never be less than 0.
P(H) = 0.2
P(M))= 0.3
P(N)= 0.5
This clearly shows that Probability can never be zero.
3. Mr. Gupta is registered contractor with government. Recently, Mr. Gupta has submitted his
tender for two contracts, A and B. the probability of getting contracts A is 0.25, the contract
B is 0.50 and both the contract is 12.5%, find the probability that Mr. Gupta will get contract
A or B.
Solution: P(A U B) = P(A)+P(B)-P(A int. B)
= 0.25+0.50-0.125
= 0.625

Conditional Probability
4. A business firm has invited applications for a managerial post. The probability that an applicant
has a post graduate qualification is 0.3 and that he has adequate work experience is o.7and that
he has both postgraduate qualification and work experience is 0.4. Assuming that 50 applicant
have applied for this managerial post in the company, find out how many applicants would
have either a postgraduate degree or adequate work experience.

Solution: P(PG) = 0.3

Applicant with PG/50 = 0.3
Applicant with PG = 50*0.3
= 15
P(WE) = 0.7
Applicant with WE/50 = 0.7
Applicant with WE = 50*0.7
= 35
5. A box contain 8white, 6re and 4 green balls. Find the probability that they are drawn in the
order whit, green and red.
Solution:

(a) When the ball is not replaced after the draw, this is the case of independent events
8 4 6
𝑃(𝑊𝐺𝑅) = 𝑃(𝑊)𝑋𝑃(𝐺)𝑋𝑃(𝑅) = ( ) 𝑋 ( ) 𝑋 ( ) = 0.0329
18 18 18
(b) When the ball is replaced after the draw, this is the case of independent events
 8 4 6
𝑃(𝑊𝐺𝑅) = 𝑃(𝑊)𝑋𝑃(𝐺/𝑊)𝑋𝑃(𝑅/𝑊𝐺) = ( ) 𝑋 ( ) 𝑋 ( ) = 0.0392
18 17 16
Where 𝑃(𝑅/𝑊𝐺) is the conditional probability of getting red ball given that white and green
balls have already been drawn.

Baye’s Theorem

6. Suppose two machines I and II which are used for manufacturing of shoes. Let E1 be the event
of shoes produced by machine I and E2 be the event of shoes produced by machine II. Machine
I produces 60% of the shoes and machine II 40%. It is also reported that 10% of the shoes
produced by machine I are defective as against 20% by machine II. What is the probability that
a non-defective shoe was manufactured by machine I?

E1 E2
Defect 10% 20%
Non Defect 90% 80%
Total 60% 40%

P(E1/ND) = P(ND/E1)*P(E1)
P(ND/E1)*P(E1)+ P(ND/E2)*P(E2)

= 0.9*0.6
0.9*0.6+0.8*0.4
= 0.54/0.54+0.32
= 0.54/0.86 = 0.62 OR 62%

7. If a machine is setup correctly it produces 90% good items; if it is incorrectly set up then it
produces 10%good items. Chances for a setting to be correct and incorrect are in the ratio 7:3.
After a setting is made, the first two items produced to be good items. What is the chance that
the setting is correct
Solution:
Correctly Incorrectly
Good Items 90% 10%
Total 70% 30%

P(C/G) = P(G/C)*P(C)
P(G/C)*P(C)+P(G/IC)*P(IC)
 = 0.9*0.7
0.9*0.7+0.1*0.3

= 0.56/0.56+0.03 =0.56/0.59 = 0.33 OR 33%

8. In Private (Public traded company) and Public (Government) Company, the main difference
between INstock exchange, while a private company's shares are not. There are several more
important differences to understand, CEO (Chief Executive Officer) is the highest-ranking
individual in a company or organization. The CEO is responsible for the overall success of an
organization and for making top-level managerial decisions
Imagine you are a financial analyst at an investment bank. 60% of the companies that
increased their share price by more than 5% in the last three years replaced their CEO. At the
same time, only 35% of the companies that did not increase their share price by more than
5% in the same period replaced their CEOs. Knowing that the probability that the stock prices
grow by more than 5% is 4%, find the probability that the shares of a company that fires its
CEO will increase by more than 5%.

Before finding the probabilities, you must first define the notation of the probabilities.

 P(A) – the probability that the stock price increases by 5%

 P(B) – the probability that the CEO is replaced
 P(NI) – Probability that share is not increased by 5%
 P(A|B) – the probability of the stock price increases by 5% given that the CEO has been
replaced
 P(B|A) – the probability of the CEO replacement given the stock price has increased by
5%.
 P(B/NI) – Probability that CEO is replaced given that share not increased by 5%.

Solution:

Replaced CEO Not replaced CEO

Inc. by 5% 60% 4%
Not Inc. by 5% 35% 96%

P(A/B) = P(B/A)*P(A)

P(B/A)*P(A)+ P(B/NI)*P(NI)

= 0.6*0.04

0.6*0.04+0.35*0.96

= 0.24/0.24+0.336 = 0.24/0.576 = 0.416 OR 41.6%