Problem Set 3
Statistics for Business Decision
Gunawan, Ph.D.
1. Some people are in favor of reducing federal taxes to increase consumer spending and
others are against it. Two persons are selected and their opinions are recorded.
Assuming no one is undecided, list the possible outcomes.
2. A quality control inspector selects a part to be tested. The part is then declared
acceptable, repairable, or scrapped. Then another part is tested. List the possible
outcomes of this experiment reqarding two parts.
3. A large company must hire a new president. The Board of Directors prepares a list of
five candidates, all of whom are equally qualified. Two of these candidates are
members of a minority group. To avoid bias in the selection of the candidate, the
company decides to select the president by lottery.
a. What is the probability one of the minority candidates is hired?
b. Which concept of probability did you use to make this estimate?
4. The events A and B are mutually exclusive. Suppose P( A)=.30 and P(B)=.20. What is
the probability of either A or B occurring? What is the probability that neither A nor B
will happen?
5. The events X and Y are mutually exclusive. Suppose P( X)=.05 and P(Y )=.02. What is
the probability of either X or Y occurring? What is the probability that neither X nor Y
will happen?
6. The chair of the board of directors says, "There is a 50% chance this company will earn
a profit, a 30% chance it will break even, and a 20% chance it will lose money next
quarter."
a. Use an addition rule to find the probability the company will not lose money next
quarter.
b. Use the complement rule to find the probability it will not lose money next quarter.
7. Suppose P(X1 )=.75 and P(Y2∣X1 )=.40. What is the joint probability of X1 and Y2 ?
8. A local bank reports that 80% of its customers maintain a checking account, 60% have
a savings account, and 50% have both. If a customer is chosen at random, what is the
probability the customer has either a checking or a savings account? What is the
probability the customer does not have either a checking or a savings account?
9. All Seasons Plumbing has two service trucks that frequently need repair. If the
probability the first truck is available is .75 , the probability the second truck is available
is .50 , and the probability that both trucks are available is .30 , what is the probability
neither truck is available?
10. P ( A 1 )=.20 , P ( A2 ) =.40 , P ( A3 ) =.40 , P ( B1 ∣ A1 ) =.25 , P ( B1 ∣ A 2 )=.05 , and P ( B 1 ∣ A 3 )=.10.
Use Bayes' theorem to determine P ( A 3 ∣ B1 ).
11. The Ludlow Wildcats baseball team, a minor league team in the Cleveland Indians
organization, plays 70 % of their games at night and 30 % during the day. The team wins
50 % of their night games and 90 % of their day games. According to today's newspaper,
they won yesterday. What is the probability the game was played at night?
12. Dr. Stallter has been teaching basic statistics for many years. She knows that 80 % of
the students will complete the assigned problems. She has also determined that
among those who do their assignments, 90 % will pass the course. Among those
students who do not do their homework, 60 % will pass. Mike Fishbaugh took statistics
last semester from Dr. Stallter and received a passing grade. What is the probability
that he completed the assignments?
13. A pollster randomly selected four of 10 available people. How many different groups of
four are possible?
14. A telephone number consists of seven digits, the first three representing the exchange.
How many different telephone numbers are possible within the 537 exchange?
15. An overnight express company must include five cities on its route. How many different
routes are possible, assuming that it does not matter in which order the cities are
included in the routing?