. Answers to Homework Assignment 2 for Units 4, 5, and 6 (30 points) .

Problem 1 (Unit 4). Etisalat regularly surveys both male and female customers. One survey

question asks opinion about “overall customer satisfaction,” with four possible responses:

Excellent, Good, Average, and Poor. After analyzing the results from the latest survey, the

following table of joint probabilities was produced.

. Excellent (E) Good (G) Average (A) Poor (P)

Female (F) .27 .14 .06 .03
Male (M) .22 .10 .12 .06

Answer: We start by adding more information to the above table as follow.

. Excellent (E) Good (G) Average (A) Poor (P) .

Female (F) .27 = P(E∩F) .14 = P(G∩F) .06 = P(A∩F) .03 = P(P∩F) P(F) = .50

Male (M) .22 = P(E∩M) .10 = P(G∩M) .12 = P(A∩M) .06 = P(P∩M) P(M) = .50
.27 = P(E) .24 = P(G) .18 = P(A) .09 = P(P) P(S) = 1.0

a. What is the probability that a randomly chosen respondent rated Etisalat excellent?

Answer: P(E) = P(E∩F) + P(E∩M) = .27 + .22 = .49

b. What is the probability that a randomly chosen male respondent rated Etisalat excellent? Show

∩ .
Answer: P | = = = .44 (or 44%)
.

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c. What is the probability that a randomly chosen respondent who rated Etisalat excellent is male?

∩ .
Answer: P | = = = .449 (or 44.9%)
.

d. What is the probability that a randomly chosen respondent is female?

Answer: P(F) = P(E∩F) + P(G∩F) + P(A∩F) + P(P∩F) = .27 + .14 + .06 + .03 = .50

e. What is the probability that a randomly chosen respondent is either female, or rated Etisalat
average, or both?

Answer: P ∪ P P P ∩ = .50 + .18 – .06 = .62

f. What is the probability that a randomly chosen respondent is both male and rated Etisalat
average?

Answer: P(M∩A) = .12

g. Are gender and customer satisfaction rating independent? Show your work.

Answer: No. Because, for example, from Questions “a” and “b”, P | = .44 ≠ P(E) = .49

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Problem 2 (Unit 4). Of the students in a business school, 20% are accounting majors (A), 50% are

finance majors (F), and 30% are marketing majors (M). Of those who are accounting majors, 15%

are expats (E). Of those who are finance majors, 45% are expats (E). Of those who are marketing

majors, 65% are expats (E).

Here, P = .20, P = .50, P = .30, P | .15 , P | .45, and P | .65

a. What is the probability that a randomly selected student is expat? Show your calculations.

Answer: P(E) = P | P(A) + P | P(F) + P | P(M)

P(E) = (.15)(.20) + (.45)(.50) + (.65)(.30) = .03 + .225 + .195 = .45 (or 45%)

b. What is the probability that a randomly selected student is an accounting major (A), given

that the student is expat (E)? Show your calculations.

∩ P | P A . .
Answer: P | = = = = .067 (or 6.7%)
P E .

c. What is the probability that a randomly selected student is a marketing major (M), given

that the student is local (L)? Show your calculations.

P | P M 1 P | P M . .
Answer: P | = = = = .191 (or 19.1%)
P L 1 P E .

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Problem 3 (Unit 4). Answer the following questions.

a. You are asked to predict, in order, the economic performance of the GCC countries

(Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE) at the end of the year. What is

the probability of making the correct prediction by chance? Show your calculations.

Answer: Here, x = 6.
Total number of different ordering = x! = 6! = 6 × 5 × 4 × 3 × 2 × 1 = 720

The probability of making the correct prediction by chance = = .00139 (or .139%)

b. You are asked to predict, in order, the top three best economic-performing GCC countries

at the end of the year. What is the probability of making the correct prediction by chance?

Answer: Here, n = 6 and x = 3. Note that “order” matters.

! !
Total number of different permutations = = = 120
! !

The probability of making the correct prediction by chance = = .0083 (or .83%).

c. You are asked to predict the top three best economic-performing GCC countries at the end

of the year. What is the probability of making the correct prediction by chance?

Answer: Here, n = 6 and x = 3. Note that “order” does not matter.

! !
Total number of different combinations = = = 20
! ! ! !

The probability of making the correct prediction by chance = = .05 (or 5%).

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Problem 4 (Unit 5). The following table shows the joint probability distribution of the random
variables and .
X .
Joint probability distribution 1 2 3 .

0 .15 .14 .13

Y 1 .16 .12 .08
2 .10 .07 .05

Answer: We start by adding more information to the above table as shown below.

X .
1 2 3 .

0 .15 = P(x = 1, y = 0) .14 = P(x = 2, y = 0) .13 = P(x = 3, y = 0) .42 = P(y = 0)

Y 1 .16 = P(x = 1, y = 1) .12 = P(x = 2, y = 1) .08 = P(x = 3, y = 1) .36 = P(y = 1)
2 .10 = P(x = 1, y = 2) .07 = P(x = 2, y = 2) .05 = P(x = 3, y = 2) .22 = P(y = 2)
.
.41 = P(x = 1) .33 = P(x = 2) .26 = P(x = 3) 1.0

a. Are the two requirements satisfied for this joint probability distribution? Explain clearly.
Show your calculations.

Answer:
Yes, because the joint probabilities are between 0 and 1, and their sum equals 1.

That is, .15 + .14 + .13 +.16 + .12 + .08 + .10 + .07 + .05 = 1.0

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 b. Find the marginal probability distribution of and graph it. In addition, find the mean and
standard deviation of X.

Note that: P(x = 1) = P(x = 1, y = 0) + P(x = 1, y = 0) + P(x = 1, y = 0) = .15 + .16 + .10 = .41
P(x = 2) = P(x = 2, y = 0) + P(x = 2, y = 0) + P(x = 2, y = 0) = .14 + .12 + .07 = .33
P(x = 3) = P(x = 3, y = 0) + P(x = 3, y = 0) + P(x = 3, y = 0) = .13 + .08 + .05 = .26

x P(x) x P(x) (x ‒ μx)2 P(x) .

2
1 .41 1(.41) = .41 (1 ‒ 1.85) (.41) = .2962
2 .33 2(.33) = .66 (2 ‒ 1.85)2(.33) = .0074
3 .26 3(.26) = .78 (3 ‒ 1.85)2(.26) = .3439
__________________________________________________________________________
∑ P(x) = 1.0 E(X) = μx = ∑ x P(x) = 1.85  x2 = ∑(x ‒ μx)2 P(x) = .6475

σx √. 715 = .805

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 c. Find the marginal probability distribution of and graph it. In addition, find the mean and
standard deviation of Y.

Note that: P(y = 0) = P(x = 1, y = 0) + P(x = 2, y = 0) + P(x = 3, y = 0) = .15 + .14 + .13 = .42
P(y = 1) = P(x = 1, y = 1) + P(x = 2, y = 1) + P(x = 3, y = 1) = .16 + .12 + .08 = .36
P(y = 2) = P(x = 1, y = 2) + P(x = 2, y = 2) + P(x = 3, y = 2) = .10 + .07 + .05 = .22

y P(y) y P(y) (y ‒ μy)2 P(y) .

0 .42 0(.42) = 0 (0 ‒ .80)2(.42) = .2688
1 .36 1(.36) = .36 (1 ‒ .80)2(.36) = .0144
2 .22 2(.22) = .44 (2 ‒ .80)2(.22) = .3168
__________________________________________________________________________
∑ P(y) = 1.0 E(Y) = μy = ∑ y P(y) = .80  y2 = ∑(y ‒ μy)2 P(y) = .60

σy √0.60 = .775

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d. We know that Cov(X, Y) = -.0625. Find the correlation coefficient between and .

Answer:

.0625
= = –.10
.805 .775

e. Comment on the direction and the strength of the association between and .

Answer: ρ = –.10 is negative and much closer to 0 than –1. This means there is a weak
negative linear association between X and Y.

f. Find the mean value of ( + ) and the standard deviation of ( + ).

Answer:

E(X + Y) = E(X) + E(Y) = 1.85 + .80 = 2.65

V(X + Y) = V(X) + V(Y) + 2 Cov(X, Y) = .6475 + .60 + 2(–.0625) = 1.1225

S.D. of (X + Y) = √1.1225 = 1.06

g. Let W = 2Y + 5. Find the mean value of W and the standard deviation of W. Show your
calculations.

Answer:

E(W) = E(2Y) + 5

E(W) = 2E(Y) + 5 = 2(.80) + 5 = 6.6

V(W) = V(2Y + 5) = V(2Y) + 0 = 4(.60) = 2.40

S.D. of W = √2.40 = 1.55

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Problem 6 (Unit 5). Ali has a quiz, and he did not study for it. He intends to rely on luck to pass the
quiz. The quiz has 4 multiple choice questions. Each question has 5 possible answers, only one of
which is correct. Ali plans to guess the answer to each question.

Let the random variable X represent the number of successes (or the number of correct answers).

a. Graph the probability distribution function of X. Show your calculations.

Answer: Here, n = 4, meaning that X can take 0, 1, 2, 3, 4

The probability of success is p = = .2

!
P(x) = px(1 – p)n-x for x = 0, 1, 2, 3, 4 or P(x) = px(1 – p)n-x
! !

!
For x = 0, P(0) = ( ).20(1 – .2)4 – 0 P(0) = .4096
! !

!
For x = 1, P(1) = ( ).21(1 – .2)4 – 1 P(1) = .4096
! !

!
For x = 2, P(2) = ( ).22(1 – .2)4 – 2 P(2) = .1536
! !

!
For x = 3, P(3) = ( ).23(1 – .2)4 – 3 P(3) = .0256
! !

!
For x = 4, P(4) = ( ).24(1 – .2)4 – 4 P(4) = .0016
! !

Probability distribution of X
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 b. Find the probability that Ali gets at most three answers correct.

Answer:

P(X ≤ 3) = P(0) + P(1) + P(2) + P(2) + P(3) = .4096 + .04069 +.1536 + .0256 = .9984 (or 99.84%).

c. Find the probability that Ali gets at least two answers correct.

Answer: P(X ≥ 2) = P(2) + P(3) + P(4) = .1536 + .0256 + .0016 = .1808 (or 18.08%).

d. Find the mean and standard deviation of X.

Answer: Here, n = 4 and p = .2

E(X) = np = (4)(.2) = .8 correct answer

V(X) = np(1 – p) = (4)(.2)(.8) = .64

S.D. of X = √. 64 = .8 correct answer

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Problem 7 (Unit 6). SAT-Math scores (denoted by X) are normally distributed with a mean of 500
and standard deviation of 100.

a. Find Q1, Q2, and Q3 of the distribution of scores (X). Show your work by drawing a normal
distribution that includes your answers.

Answer:

_____________________________________________________________________________
Note: Q1, Q2, and Q3 for a z-distribution are:
. .
Q1 (for a z-distribution) Q2 (for a z-distribution) Q3 (for a z-distribution)

–.675 0 .675
_____________________________________________________________________________

P(X ≤ Q1) = P( ) = P( ) = .25

From the Z-table or Excel, the z-value corresponding to .25 is –.675

That is, = –.675, and Q1 = 432.5

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P(X ≤ Q2) = P( ) = P( ) = .50

From the Z-table or Excel, the z-value corresponding to .50 is zero

That is, = 0, and Q2 = $500

P(X ≤ Q3) = P( ) = P( ) = .75

From the Z-table or Excel, the z-value corresponding to .75 is .675

That is, = .675, and Q3 = $567.5

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b. A score in the bottom 10% is considered to be a low score. What is the cutoff score for a
student to have a low score? Show your work by drawing a normal distribution that includes
your answer.

Answer:

P(X ≤ x) = P( ) = P(Z ≤ ) = .10

From the table or Excel, the z-value corresponding to .10 is ‒1.28

That is, = ‒1.28, and x = $372

____________________________________ X

372 500

Mean

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c. A score in the top 10% is considered to be a high score. What is the cutoff score for a
student to have a high score? Show your work by drawing a normal distribution that includes
your answer.

Answer:

P(X ≥ x) = P( ) = P(Z ≥ ) = .10 Rule #4. P(Z > z) = 1 – P(Z < z)

1 - P(Z ≤ ) = .10,

P(Z ≤ ) = .90

From the table or Excel, the z-value corresponding to .90 is 1.28

That is, = 1.28, and x = $628

____________________________________ X

500 628

Mean

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Problem 8 (Unit 6). Using the appropriate table in the textbook (Keller, Appendix B) or Excel,

a. Find z.05. Draw the distribution and locate the z-value (z.05) in the distribution.

Answer:

 P(Z > z.05) = .05 1 – P(Z < z.05) = .05 P(Z < z.05) = .95

 From the z-table or Excel, z.05 = 1.645 (the graph is in part b)

b. Find ‒z.05. Draw the distribution and locate the z-value (‒z.05) in the distribution.

Answer:

 From part (a), we know that z.05 = 1.645. Thus, -z.05 = -1.645

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c. Find t40,.10. Draw the distribution and locate the t-value (t40,.10) in the distribution.

Answer:

 P(t40 > t40,.10) = .10

 From the t-table or Excel, t40,.10 = 1.303 (the graph is in part d)

Change the sign

d. Find ‒t40,.10. Draw the distribution and locate the t-value (‒t40,.10) in the distribution.

Answer:

 From part (c), we know that t40,.10 = 1.303. Thus, -t40,.10 = -1.303

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e. Find ,. . Draw the distribution and locate the χ2-value ( ,. ) in the distribution.

Answer:

 P(χ2 > ,. ) = .01 From the -table or Excel, ,. = 37.57

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f. Find , ,. . Draw the distribution and locate the F-value ( , ,. ) in the distribution.

Answer:

 P(F(18,90) > F(18,90), .05) = .05 From the F-table or Excel, F(18,90), .05 = 1.72

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 Formula sheet (Units 4, 5, and 6)

P ∪ P P P ∩ P ∪ P P , when P ∩ =0

P ∩
P |
P

P ∩ P | P P ∩ P P , when P | P

____________________________________________________________________________________________

P(A) =

! !
Ordering: x! Permutation: Combination:
! ! !

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 ∩ |
P | where i = 1, 2, 3
| | |

For instance, when i = 1, then

P ∩ P | P
P |
P P | P P | P P | P

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E(X) = μ = ∑ x P(x) V(X) = σ2 = ∑ (x – μ)2 P(x) V(X) = σ2 = – μ2 (shortcut version)
all x all x

σ √σ

______________________________________________________________________

 Let X be a random variable (and let c be a constant)

 E(c) = c For example, E(10) = 10

 E(X + c) = E(X) + c For example, E(X + 10) = E(X) + 10

 E(c X) = c E(X) For example, E(10 X ) = 10 E(X)

 V(c) = 0 For example, V(10) = 0

 V(X + c) = V(X) For example, V(X + 10) = V(X)

 V(c X) = c2 V(X) For example, V(10 X) = 100 V(X)

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 μx = ∑ x P(x) x2 = ∑ (x – μx)2 P(x) σx = x2
all x all x

μy = ∑ y P(y) y2 = ∑ (y – μy)2 P(y) σy y2

all y all y

Cov(X,Y) = σxy = ∑ ∑ (x – μx)( y – μy) P(x, y)

all x all y

σ
σ σ

_____________________________________________________________________________________

E(X + Y) = E(X) + E(Y) E(X – Y) = E(X) – E(Y)

V(X + Y) = V(X) + V(Y) + 2Cov(X, Y) V(X – Y) = V(X) + V(Y) – 2Cov(X, Y)

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 !
P(x) = px(1 – p)n-x for x = 0, 1, 2, …, n where
! !

μ = np σ2 = np(1 – p) σ √σ = 1–
___________________________________________________________________________________________

f(x) = where a ≤ x ≤ b

P(x1 < X < x2) = (x2 – x1) ( )

μ = E(X) = V(X) = σ2 =

___________________________________________________________________________________________

Let X ~ N(μ, σ2)

Then, = Z ~ N(0, 1)
___________________________________________________________________________________________

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Transformation to “cumulative probability”

Rule #1: P(a < Z < b) = P(Z < b) – P(Z< a)

Rule #2: P(Z > z) = P(Z < –z)

Rule #3: P(Z > –z) = P(Z < z)

Rule #4: P(Z > z) = 1 – P(Z < z)

___________________________________________________________________________________________

E(z) = 0 V(z) = 1

E(tv) = 0 V(tv) = 1+

E(χ2v) = v V(χ2v) = 2v

E(Fv1,v2) = not needed here V(Fv1,v2) = not needed here

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