Basic Probability

Name:

1. A survey of magazine subscribers showed that 45.8% rented a car during the past 12
months for business reasons, 54% rented a car during the past 12 months for personal
reasons, and 30% rented a car during the past 12 months for both business and personal
reasons.

(a) [2 pts] What is the probability that a subscriber rented a car during the past 12
months for business or personal reasons?

(b) [2 pts] What is the probability that a subscriber did not rent a car during the
past 12 months for either business or personal reasons?

2. A university conducted a survey with its alumni and asked the alumni if their experi-
ence with the university was satisfactory. There are 4 possible answers.

Below expectations 26%

Met expectations 65%
Above expectations
No response 4%

(a) [2 pts] What percentage of alumni said that their experience is above their
expectations?

(b) [2 pts] What percentage of alumni said that their experience met their experi-
ences or is above their experiences?

3. Do males or females feel more stressed out at work? A survey of employed adults
conducted online by Harris Interactive on behalf of the American Psychological Asso-
ciation revealed the following.

Stressed out at work

Yes No
Male 244 495
Female 282 480

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 (a) [2 pts] When an employed adult is selected at random, what is the probability
that the employed adult was stressed out at work?

(b) [2 pts] When an employed adult is selected at random, what is the probability
that the employed adult was a male who was stressed out at work?

(c) [2 pts] When an employed adult is selected at random, what is the probability
that the employed adult was a male or was stressed out at work?

4. A poll is conducted to learn about attitudes toward investment and retirement asked
male and female respondents how important they felt level of risk was in choosing a
retirement investment. The following table was constructed from the data provided.
“Important” means the respondent said the level of risk was either important or very
important.

Male Female
Important 22 27
Not Important 28 23

(a) [2 pts] What is the probability that a randomly chosen respondent will say that
the level of risk is important?

(b) [2 pts] What is the probability that a respondent will say that the level of risk
is important given that the respondent is male?

(c) [2 pts] What is the probability that a respondent will say that the level of risk
is important given that the respondent is female?

(d) [2 pts] Is the “level of risk” independent of the “gender” of the respondent?

5. A business school conducted a survey with its senior students who are applying to an
MBA program. The school asked the age of eac participant and it they applied to
more than one school. The following table is constructed from the survey results.

Applied to more than one school

Yes No
23 and under 207 201
24-26 299 379
27 and over 302 630

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 (a) [2 pts] What is the probability that a randomly selected applicant is 23 or under?

(b) [2 pts] What is the probability that a randomly selected applicant applied to
more than one school?

(c) [2 pts] Given that a randomly selected applicant applied to more than one school,
compute the conditional probability that the applicant is between 24 and 26.

(d) [2 pts] Given that a randomly selected applicant is 27 or over, compute the
conditional probability that the applicant applied to more than one school.

(e) [2 pts] Use the answers to (b) and (d) to decide if the “age” and the “number of
schools an applicant applies to” are independent.

6. A joint survey by Parade magazine and Yahoo! found that 60% of American workers
say that if they could do it all over again, they would choose a different career (USA
Today, September 24, 2012) The survey also found that of all the American workers
who said they would choose a different career if they could do it all over again, 22%
say they plan to retire early and 78% say they plan to wait and retire at age 65 or
older. Also, of all the American workers who said they would choose the same career
if they could do it all over again, 45% say they plan to retire early and 55% say they
plan to wait and retire at age 65 or older.

(a) [2 pts] Given that a randomly selected American worker plans to retire early,
what is the probability that he/she would choose the same career if he/she could
do it all over again?

(b) [2 pts] Given that a randomly selected American worker plans to wait and retire
at age 65 or older, what is the probability that he/she would choose the same
career if he/she could do it all over again?

7. [2 pts] Information about mutual funds provided by Morningstar Investment Research

includes the type of mutual fund (Domestic Equity, International Equity, or Fixed
Income) and the Morningstar rating for the fund. The rating is expressed from 1-star
(lowest rating) to 5-star (highest rating). A sample of 25 mutual funds was selected
from Morningstar Funds 500. The following counts were obtained:

• Sixteen mutual funds were Domestic Equity funds.

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 • Thirteen mutual funds were rated 3-star or less.
• Eight mutual funds were Domestic Equity funds and rated 3-star or less.

Assume that one of these 25 mutual funds will be randomly selected. What is the
probability of selecting a fund which is a Domestic Equity or is rated 3-star or less?

8. The automobile industry sold 657,000 vehicles in the United States during January
2009 (The Wall Street Journal, February 4, 2009). This volume was down 37%
from January 2008 as economic conditions continued to decline. The Big Three U.S.
automakers–General Motors, Ford, and Chrysler–sold 280,500 vehicles, down 48% from
January 2008. A summary of sales by automobile manufacturer and type of vehicle
sold is shown in the following table. Data are in thousands of vehicles. The non–
U.S. manufacturers are led by Toyota, Honda, and Nissan. The category Light Truck
includes pickup, minivan, SUV, and crossover models.

Type of Vehicle
Car Light Truck
U.S. 87.4 193.1
Manufacturer
Non-U.S. 228.5 148.0

(a) [2 pts] What is the probability that a randomly selected vehicle is a car?

(b) [2 pts] Given that a randomly selected vehicle was manufactured by one of the
U.S. automakers, what is the conditional probability that the vehicle was a car?

(c) [2 pts] Are the “manufacturer” and the “type of vehicle” independent? Explain
using the probabilities you obtained in parts (b) and (c).

(d) [2 pts] What is the probability that a vehicle is a car or is manufactured in the
US?

(e) [2 pts] What is the probability that a vehicle is a car and is manufactured in the
US?

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 Discrete Probability Distributions

Name:

1. For unemployed persons in the United States, the average number of months of un-
employment at the end of December 2009 was approximately three months (Bureau
of Labor Statistics, January 2010). Suppose the following data are for a particular re-
gion in upstate New York. The values in the first column show the number of months
unemployed, and the values in the second column show the corresponding number of
unemployed persons.

Months Unemployed Number Unemployed

1 1000
2 1700
3 2300
4 2700

Let X be a random variable indicating the number of months a person is unemployed.

(a) [2 pts] Use the data to develop a probability distribution function for X.

(b) [2 pts] Show that your probability distribution satisfies the conditions for a valid
discrete probability distribution function.

(c) [2 pts] What is the probability that a person is unemployed for two months or
less?

(d) [2 pts] What is the probability that a person is unemployed for more than three
months?

2. The following probability distributions of job satisfaction scores for a sample of in-
formation systems (IS) senior executives and middle managers range from a low of 1
(very dissatisfied) to a high of 5 (very satisfied).

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 Probability
Job Satisfaction IS Senior IS Middle
Score Executives Managers
1 0.05 0.04
2 0.09 0.10
3 0.03 0.12
4 0.42 0.46
5 0.41 0.28

(a) [2 pts] What is the expected value of the job satisfaction score for senior execu-
tives?

(b) [2 pts] What is the expected value of the job satisfaction score for middle man-
agers?

(c) [2 pts] Compute the variance of the job satisfaction score for senior executives.

(d) [2 pts] Compute the variance of the job satisfaction score for middle managers.

(e) [2 pts] Compute the standard deviation of the job satisfaction score for senior
executives.

(f) [2 pts] Compute the standard deviation of the job satisfaction score for middle
managers.

3. In San Francisco, 30% of workers take public transportation daily (USA Today, De-
cember 21, 2005). Let X be the number of workers who take public transportation in
a sample of 10 workers.

(a) [2 pts] Identify n and p of this binomial experiment.

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 (b) [2 pts] What is the probability that exactly three workers take public trans-
portation daily from this sample of 10 workers?

(c) [2 pts] What is the probability that at least three workers take public trans-
portation daily from this sample of 10 workers?

(d) [2 pts] What is the expected number of workers who take public transportation
daily in the sample of 10 workers?

(e) [2 pts] What is the variance of the number of workers who take public trans-
portation daily in the sample of 10 workers?

(f) [2 pts] What is the standard deviation of the number of workers who take public
transportation daily in the sample of 10 workers?

4. Phone calls arrive at the rate of 50 per hour at the reservation desk for Regional Air-
ways. Assume that the arrival rate is constant throughout the hours and the incoming
calls are independent of each other.
(a) [2 pts] Compute the expected number of calls arriving in a 5-minute interval of
time.

(b) [2 pts] Compute the probability of receiving exactly three calls in a 5-minute
interval of time.

(c) [2 pts] Compute the variance of the number of calls arriving in a 5-minute interval
of time.

(d) [2 pts] Compute the standard deviation of the number of calls arriving in a
5-minute interval of time.

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5. The probability distribution function for the random variable X is given as follows:

x f (x)
20 0.20
25 0.15
30 0.25
35 0.40

(a) [2 pts] Is this probability distribution function valid? Explain.

(b) [2 pts] What is the probability that X = 30?

(c) [2 pts] What is the probability that X is less than or equal to 25?

(d) [2 pts] What is the probability that X is greater than 30?

6. The Census Bureau’s Current Population Survey shows that 28% of individuals, ages
25 and older, have completed four years of college (The New York Times Almanac,
2006). For a sample of 15 individuals, ages 25 and older, answer the following questions:

(a) [2 pts] What is the probability that four will have completed four years of college?

(b) [2 pts] What is the probability that three or more will have completed four years
of college?

(c) [2 pts] What is the expected number of people who have completed four years
of college?

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 (d) [2 pts] What is the variance of the number of people who have completed four
years of college?

7. During the period of time that a local university takes phone-in registrations, calls
come in at the rate of one every two minutes.

(a) [2 pts] What is the expected number of calls in a five-minute period?

(b) [2 pts] What is the probability of getting three calls in five minutes?

(c) [2 pts] What is the probability of getting no calls in a five-minute period?

(d) [2 pts] What is the standard deviation of the number of calls in a five-minute
period?

8. A Randstad/Harris interactive survey reported that 25% of employees said that their
company is loyal to them (USA Today, November 11, 2009). Suppose 10 employees
are selected randomly and will be interviewed about company loyalty.

(a) [2 pts] Identify n and p of this binomial experiment.

(b) [2 pts] What is the probability that none of the 10 employees will say their
company is loyal to them?

(c) [2 pts] What is the probability that 4 of the 10 employees will say their company
is loyal to them?

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 (d) [2 pts] What is the expected number of employees (out of 10 employees) who
will say their company is loyal to them?

(e) [2 pts] What is the variance on the number of employees (out of 10 employees)
who will say their company is loyal to them?

9. More than 50 million guests stay at bed and breakfast (B&Bs) each year. The website
for the Bed and Breakfast Inns of North America, which averages seven visitors per
minute, enables many B&Bs to attract guests.

(a) [2 pts] Compute the probability of observing no website visitors in a one-minute

period.

(b) [2 pts] Compute the probability of observing two or more website visitors in a
one-minute period.

(c) [2 pts] Compute the expected number of website visitors in a one-minute period.

(d) [2 pts] Compute the variance of the number of website visitors in a one-minute
period.