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Chapter3 Problems Solutions Concise

Chapter 3 of 'Business Analytics' by U. Dinesh Kumar covers various probability problems and their solutions, including joint, marginal, and conditional probabilities, as well as concepts like independence and different probability distributions such as binomial, Poisson, and geometric. Each problem is presented with a concise explanation of the method used to derive the solution. The chapter also includes applications of probability in real-world scenarios, such as the Monty Hall problem and Bayes' theorem in medical testing.

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6 views2 pages

Chapter3 Problems Solutions Concise

Chapter 3 of 'Business Analytics' by U. Dinesh Kumar covers various probability problems and their solutions, including joint, marginal, and conditional probabilities, as well as concepts like independence and different probability distributions such as binomial, Poisson, and geometric. Each problem is presented with a concise explanation of the method used to derive the solution. The chapter also includes applications of probability in real-world scenarios, such as the Monty Hall problem and Bayes' theorem in medical testing.

Uploaded by

Harsh Shiroya
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 3 — Problems & Solutions (Concise Answers & Brief Explanations)

Source: Business Analytics — U. Dinesh Kumar, Chapter 3

Problem 1:
Joint table: P(Single ∩ Default) = 42/1000 = 0.042. P(Married ∩ Default) = 60/1000 = 0.060. P(Divorced ∩ Default) =
13/1000 = 0.013. Max joint probability: Married (0.060). Explanation: joint = cell count ÷ total.

Problem 2:
Marginals: P(Default)=115/1000=0.115; P(Non-default)=0.885; P(Single)=0.300; P(Married)=0.650; P(Divorced)=0.050.
Explanation: marginal = row/column total ÷ grand total.

Problem 3:
Conditional: P(Default | Married) = 60/650 ≈ 0.0923. Explanation: conditional = joint ÷ marginal of condition.

Problem 4:
Independence: P(Single)*P(Default)=0.300*0.115=0.0345 ≠ P(Single ∩ Default)=0.042. Thus not independent. Explanation:
independence requires product of marginals = joint.

Problem 5:
PMF: x={0,1,2,3,4} with p={0.20,0.15,0.25,0.25,0.15}. (a) CDF F(2)=0.20+0.15+0.25=0.60. (b) E[X]=2.0. Var(X)=1.8.
Explanation: use PMF sums for moments.

Problem 6:
Binomial: n=10, p=0.3. P(X=4)=C(10,4)*0.3^4*0.7^6 ≈ 0.2001. Mean=3, Var=2.1. Explanation: standard binomial formula and
moments.

Problem 7:
Normal approx: X~Bin(50,0.2). µ=10, σ=√8≈2.828. P(3≤X≤7) ≈ P(2.5<X<7.5). z1≈-2.652, z2≈-0.884. Probability ≈
Φ(-0.884)-Φ(-2.652) ≈ 0.188-0.004 = 0.184. Explanation: continuity correction + standard normal.

Problem 8:
Poisson: λ=3. P(X=2)= (3^2 e^{-3})/2! ≈ 0.2240. Explanation: Poisson PMF.

Problem 9:
Poisson limit: Binomial(n=1000, p=0.003) P(X=2) ≈ Poisson(λ=3) P(2) ≈ 0.224. Explanation: n large, p small, np=λ.

Problem 10:
Geometric (p=0.2): P(X>5)=(0.8)^5=0.32768. Memoryless: P(X>8 | X>5) = (0.8)^3 = 0.512 = P(X>3). Explanation: geometric
is memoryless.

Problem 11:
Monty Hall: Switching wins with probability 2/3. Explanation: initial pick has 1/3 chance; host reveal transfers 2/3 to
other unopened door.

Problem 12:
Bayes (medical): prevalence=0.01, sensitivity=0.95, specificity=0.90. P(D|+) = (0.95*0.01)/((0.95*0.01)+(0.10*0.99)) ≈
0.0876 (8.76%). Explanation: low prevalence reduces PPV.

Problem 13:
Uniform(2,8): E[X]=5, Var(X)=3. Explanation: standard uniform formulas.

Problem 14:
Normal: X~N(100,15^2). P(85<X<125) => z1=-1, z2=1.667. Probability ≈ Φ(1.667)-Φ(-1)=0.9525-0.1587=0.7938. Explanation:
standardize and use table.

Problem 15:
Normal approx: Binomial(60,0.5). µ=30, σ≈3.873. P(X≥36) ≈ P(X>35.5). z≈1.418 => tail ≈ 0.078. Explanation: continuity
correction + normal CDF.

Problem 16:
Exponential(λ=0.1): P(T>20)=e^{-2}≈0.1353. Memoryless: P(T>30|T>10)=e^{-2}=0.1353. Explanation: exponential is
memoryless.

Problem 17:
Chi-square CI: n=11, s^2=4. df=10. χ²(0.975,10)≈3.246, χ²(0.025,10)≈20.483. 95% CI for σ^2: (10*4/20.483, 10*4/3.246) ≈
(1.953, 12.325). Explanation: plug into chi-square CI formula.

Problem 18:
MGF Poisson: M_X(t)=exp(λ(e^t-1)). M'_X(0)=λ => E[X]=λ. Explanation: derivative of MGF at zero gives first moment.

Problem 19:
Geometric expectation: with p=0.2, E[X]=1/p=5 (trials until first success convention). Explanation: standard geometric
mean.

Problem 20:
Probability to odds: p=0.8 => odds = 0.8/0.2 = 4:1. Explanation: odds = p / (1-p).

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