Examples of discrete and continuous distributions from real life:

1) An outside bet can be placed based on the numbers in dozens or numbers in the columns. There
are 3 dozen available – (1-12), (13-24), (25-36) and 3 columns of numbers available. A person
gambling can bid based on Dozens or Columns both of which cover 12 numbers on the table. No
matter if a dozen or a column is picked, the probability of winning is a little less than a third
(32.43%) due to the presence of 0 every time the game is played. It does not change for every trial
and so the probability of every outcome is the same.

2) In the U.S., Powerball lottery tickets are sold throughout the country for $2 per ticket. Every
purchase of a ticket requires the purchaser to guess five numbers ranging from 1 to 69 in any
order that he/she wishes. After a period of time, the original sequence of numbers is revealed and
the person who guesses all the five numbers wins a grand prize. This is an example of Uniform
Discrete Probability Distribution. The chance of guessing every number right is 1/69 and does not
change for every guess made.

3) Arsenal is a very famous football club in the Premier League. Based on previous data available,
Arsenal has a win probability of around 58% for a game in any season. Assuming that every game
lead to only 2 outcomes – ‘win’ or ‘lose’, a Binomial Distribution is perfect to attain the
probability of getting x success outcomes (wins) in n trials (n games).

Properties:
• Each game in the coming season can be considered as n identical trials.
• There are only two outcomes possible – win (success) and loss (failure).
• Different factors may affect their individual games, but their win probability remains the
same for every game (trial).
• Outcome of every game is independent of each other, a win or loss in the first game will not
affect the outcome of the second and so on.

4) The Olympics is an international sporting event that is held once in four years. Before the
commencement of any sport event, the participants are required to pass a drug test in order to
prevent anyone from taking part through illegal means. Every Olympic event has seen a
probability of around 2% of the participant testing positive in these tests. A binomial distribution
may be used to predict the probability of getting x successes (positive drug tests) in n trials (n =
number of participants tested) in the coming Olympic event.

Properties:
• Each drug test involving a participant can be considered to be a trial.
• There are only two outcomes – test positive (success) and test negative (failure).
• Different people may test positive during every Olympic event, but the probability of
positive testers will not change.
• The result of any one participant will not affect the result of another and so they are
independent.

5) Game Show Network is a popular American cable channel dedicated to game shows. One of the
games showcased on the channel is ‘Guess the Phrase’. It involves the showcase of only few
letters from a random phrase. The idea is to identify the entire phrase by guessing a single letter
every turn. Each participant is given a limited number of turns to guess a letter which may be a
consonant or a vowel. This is an example where Hypergeometric distributions can be used. How?
 Properties:
• Each turn that is given to the participant can be considered to be a trial that is identical.
• There are only two outcomes – participant guesses right (success) or guesses wrong (failure).
• The probability of success changes for every trial. For example, if a participant guesses a
letter correctly in the first turn, his probability of guessing another letter correctly in the next
turn increases since he has more information to work with.
• The outcome of every trial is dependent. As explained previously, if a participant guesses a
letter correctly, he has a better idea what the entire phrase might be and can use this
knowledge to guess another letter correctly in the succeeding turns.

6) According to the Bangalore Metro Rail Corporation Limited, the waiting time for every
consecutive train may be anywhere from 3 minutes to 7 minutes. Assuming that the train can
arrive within any 1-minute interval (from the above interval of 3 to 7 minutes) there is a 1/4th
chance for the random variable x for 3<=x<=7. Since the intervals are equally likely, the random
variable is said to have a uniform continuous probability distribution.

7) The normal distribution or the bell-shaped curve is often seen when analysing the scores of
students in a GRE exam. Majority of the students will get an average score which may be
assigned a ‘C’ grade. Fewer number of students may perform slightly better or worse and can get
a grade of ‘B’ or ‘D’. And an even fewer number of students perform exceptionally good or bad
with a grade of ‘A’ or ‘F’. When the frequencies of these scores are plotted, the resulting figure is
usually a bell-shaped curve with almost half of the test takers below the average and half above
the average forming a symmetrical curve.

8) In all of the studies conducted regarding the analysis of weights of new-born babies, the resulting
histogram of this continuous variable (weight) forms a normal distribution. The average weight is
around 3.5kgs with a standard deviation of 0.5kgs with outliers greater than or equal to 5kgs and
less than or equal to 2kgs above and below the mean. The distribution is described by the two
parameters – mean and standard deviation. The weight is symmetrical around the mean and
majority of the weights with small standard deviation concentrate close to the mean of 3.5kgs.

9) IQ is an example of a variable having normal distribution. The mean IQ is 100 and the standard
deviation is measured to be around 15. If a large enough sample is tested, it can be seen that the
distribution of the sample will look like a normal curve. 68% of the sample will have IQ between
85 and 115, 95% will have between 70 and 130 and 99% will have an IQ between 55 and 145.
Some exercises:
1) A technician services mailing machines at companies in the Phoenix area. Depending on the type
of malfunctioning, the service call can take 1, 2, 3 or 4 hours. The different types of malfunctions
occur at about the same frequency.
a) Develop a probability distribution for the duration of a service call.
b) Draw a graph of the probability distribution.
c) Show that your probability distribution satisfies the conditions required for a discrete
probability distribution.
d) A service call has just come in, but the type of malfunction is unknow. It is 3:00 PM and
service technicians usually get off at 5:00 PM. What is the probability the service technician
will have to work overtime to fix the machine today?

2) When a new machine is functioning properly, only 3% of the items produced are defective.
Assume that we will randomly select two parts produced on the machine and that we are
interested in the number of defective parts found.
a) Describe the conditions under which this situation would be a binomial situation.
b) Draw a tree diagram showing this problem as a two-trial experiment.
c) How many experimental outcomes result in exactly one defect being found?
d) Compute the probabilities for finding no defects, exactly one defect and two defects.

3) Military radar and missile detection systems are designed to warn a country of an enemy attack. A
reliability question is whether a detection system will be able to identify an attack and issue a
warning. Assume that a particular detection system has a .90 probability of detecting a missile
attack. Use the binomial probability distribution to answer the following questions.
a) What is the probability that a single detection system will detect an attack?
b) If two detection systems are installed in the same area and operate independently, what is the
probability that at least one of the systems will detect an attack?
c) If three systems are installed, what is the probability that at least one of the systems will
detect the attack?
d) Would you recommend that multiple detection systems be used? Explain.

4) A Gallup poll showed that 30% of Americans with the way things are going in the United States
(Gallup website, September 12, 2012). Suppose a sample of 20 Americans is selected as a part of
a study of the state of the nation.
a) Compute the probability that exactly 4 of the 20 Americans surveyed are satisfied with the
way things are going in the United States.
b) Compute the probability that at least 2 of the Americans surveyed are satisfied with the way
things are going in the United States.
c) For the sample of 20 Americans, compute the expected number of Americans who are
satisfied with the way things are going in the United States.
d) For the sample of 20 Americans, compute the variance and the standard deviation of the
number of Americans who are satisfied with the way things are going in the United States.

5) The Pew Research Centre surveyed adults who own/use the following technologies: Internet,
smartphone, email, and land-line phone (USA today, March 26, 2014) and asked which of these
technologies would be “very hard” to give up. The following responses were obtained: Internet
53%, smartphone 49%, email 36%, and land-line phone 28%.
a) If 20 adult Internet users are surveyed, what is the probability that 3 users will report that it
 would be very hard to give it up?
b) If 20 adults who own a land-line phone are surveyed, what is the probability that 5 or fewer
will report that it would be very hard to give it up?
c) If 2000 owners of smartphones were surveyed, what is the expected number that will report
that it would be very hard to give it up?
d) If 2000 users of email were surveyed, what is expected number that will report that it would
be very hard to give it up? what is the variance and standard deviation?

6) The Zagat Restaurant Survey provides food, décor, and service ratings for some of the top
restaurants across the United States. For 15 restaurants located in Boston, the average price of a
dinner, including one drink and tip, was $48.60. You are leaving on a business trip to Boston and
will eat dinner at 3 of these restaurants. Your company will reimburse you for a maximum of $50
per dinner. Business associates familiar with these restaurants have told you that the meal cost at
one-third of these restaurants will exceed $50. Suppose that you randomly select three of these
restaurants for dinner.
a) What is the probability that none of the meals will exceed the cost covered by your company?
b) What is the probability that one of the meals will exceed the cost covered by your company?
c) What is the probability that two of the meals will exceed the cost covered by your company?
d) What is the probability that all three of the meals will exceed the cost covered by your
company?

7) U.S. news & world report’s ranking of America’s best graduate schools of business showed
Harvard University and Stanford University in a tie for first place. In addition, 7 of the top 10
graduate schools of business showed students with an average undergraduate grade point
average (GPA) of 3.50 or higher (America’s Best graduate schools, 2009 edition, U.S. news &
world report). Suppose that we randomly select 2 of the top 10 graduate schools of business.
a) What is the probability that exactly one school has students with an average undergraduate
GPA of 3.50 or higher?
b) What is the probability that both schools have students with an average undergraduate GPA
of 3.50 or higher?
c) What is the probability that neither school has students with an average undergraduate GPA
of 3.50 or higher?

8) The Troubled Asset Relief Program (TARP), passed by the U.S. Congress in October 2008, provided
$700 billion in assistance for the struggling U.S. economy. Over $200 billion was given to troubled
financial institutions with the hope that there would be an increase in lending to help jump-start
the economy. But three months later, a federal Reserve survey found that two-thirds of the
banks that had received TARP funds had tightened terms for business loans (the wall street
Journal, February 3, 2009). Of the 10 banks that were the biggest recipients of TARP funds, only 3
had actually increased lending during this period.

Increased Lending Decreased Lending

BB&T Bank of America
Sun Trust Banks Capital One
U.S. Bancorp Citigroup
Fifth Third Bancorp
J.P. Morgan Chase
Regions Financial
Wells Fargo
For the purposes of this exercise, assume that you will randomly select 3 of these 10 banks for a study
that will continue to monitor bank lending practices. Let x be a random variable indicating the number
of banks in the study that had increased lending.
a) What is f(0)? What is your interpretation of this value?
b) What is f(3)? What is your interpretation of this value?
c) Compute f(1) and f(2). Show the probability distribution for the number of banks in the study
that had increased lending. What value of x has the highest probability?
d) What is the probability that the study will have at least one bank that had increased lending?
e) Compute the expected value, variance, and standard deviation for the random variable

9) A Gallup Daily Tracking Survey found that the mean daily discretionary spending by
Americans earning over $90,000 per year was $136 per day (USA today, July 30, 2012). The
discretionary spending excluded home purchases, vehicle purchases, and regular monthly
bills. Let x = the discretionary spending per day and assume that a uniform probability density
function applies with f (x) = .00625 for a <= x <= b.
a) Find the values of a and b for the probability density function.
b) What is the probability that consumers in this group have daily discretionary spending between
$100 and $200?
c) What is the probability that consumers in this group have daily discretionary spending of $150
or more?
d) What is the probability that consumers in this group have daily discretionary spending of $80
or less?

10) Suppose we are interested in bidding on a piece of land and we know one other bidder is
interested.1 The seller announced that the highest bid in excess of $10,000 will be accept- ed.
Assume that the competitor’s bid x is a random variable that is uniformly distributed between
$10,000 and $15,000.
a) Suppose you bid $12,000. what is the probability that your bid will be accepted?
b) Suppose you bid $14,000. what is the probability that your bid will be accepted?
c) What amount should you bid to maximize the probability that you get the property?
d) Suppose you know someone who is willing to pay you $16,000 for the property. Would you
consider bidding less than the amount in part(c)? Why or why not?

11) A business executive, transferred from Chicago to Atlanta, needs to sell her house in Chicago
quickly. The executive’s employer has offered to buy the house for $210,000, but the offer expires
at the end of the week. The executive does not currently have a better offer but can afford to leave
the house on the market for another month. From conversations with her realtor, the executive
believes the price she will get by leaving the house on the market for another month is uniformly
distributed between $200,000 and $225,000.
a) If she leaves the house on the market for another month, what is the mathematical expression
for the probability density function of the sales price?
b) If she leaves it on the market for another month, what is the probability she will get at least
$215,000 for the house?
c) If she leaves it on the market for another month, what is the probability she will get less than
$210,000?
d) Should the executive leave the house on the market for another month? why or why not?

12) A random variable is normally distributed with a mean of 50 and a standard deviation of 5.
a) Sketch a normal curve for the probability density function. Label the horizontal axis with
 values of 35, 40, 45, 50, 55, 60 and 65.
b) What is the probability that a random variable will assume a value between 45 and 55?
c) What is the probability that a random variable will assume a value between 40 and 60?

13) The average price for a gallon of gasoline in the United States is $3.73 and in Russia it is $3.40
(Bloomberg Businessweek, March 5–March 11, 2012). Assume these averages are the population
means in the two countries and that the probability distributions are normally distributed with a
standard deviation of $.25 in the United States and a standard deviation of $.20 in Russia.
a) What is the probability that a randomly selected gas station in the United States charges less
than $3.50 per gallon?
b) What percentage of the gas stations in Russia charge less than $3.50 per gallon?
c) What is the probability that a randomly selected gas station in Russia charged more than the
mean price in the United States?

14) The time needed to complete a final examination in a particular college course is normally
distributed with a mean of 80 minutes and a standard deviation of 10 minutes. Answer the
following questions.
a) What is the probability of completing the exam in one hour or less?
b) What is the probability that a student will complete the exam in more than 60 minutes but less
than 75 minutes?
c) Assume that the class has 60 students and that the examination period is 90 minutes in length.
How many students do you expect will be unable to complete the exam in the allotted time?

15) The American Automobile Association (AAA) reported that families planning to travel over the
Labour Day weekend would spend an average of $749 (The Associated Press, August 12, 2012).
Assume that the amount spent is normally distributed with a standard deviation of $225.
a) What is the probability of family expenses for the weekend being less than $400?
b) What is the probability of family expenses for the weekend being $800 or more?
c) What is the probability that family expenses for the weekend will be between $500 and
$1000?
d) What would the Labour Day weekend expenses have to be for the 5% of the families with the
most expensive travel plans?

16) During early 2012, economic hardship was stretching the limits of France’s welfare system. One
indicator of the level of hardship was the increase in the number of people bringing items to a
Paris pawnbroker; the number of people bringing items to the pawnbroker had increased to 658
per day (Bloomberg Businessweek, March 5–March 11, 2012). Assume the number of people
bringing items to the pawnshop per day in 2012 is normally distributed with a mean of 658.
a) Suppose you learn that on 3% of the days, 610 or fewer people brought items to the
pawnshop. What is the standard deviation of the number of people bringing items to the
pawnshop per day?
b) On any given day, what is the probability that between 600 and 700 people bring items to the
pawnshop?
c) How many people bring items to the pawnshop on the busiest 3% of days?

17) Although studies continue to show smoking leads to significant health problems, 20% of adults in
the United States smoke. Consider a group of 250 adults.
a) What is the expected number of adults who smoke?
b) What is the probability that fewer than 40 smoke?
c) What is the probability that from 55 to 60 smoke?
d) What is the probability that 70 or more smoke?
18) Playing video and computer games is very popular. Over 70% of households play such games. Of
those individuals who play video and computer games, 18% are under 18 years old, 53% are 18–59
years old, and 29% are over 59 years old (the Wall Street Journal, March 6, 2012).
a) For a sample of 800 people who play these games, how many would you expect to be under 18
years of age?
b) For a sample of 600 people who play these games, what is the probability that fewer than 100
will be under 18 years of age?
c) For a sample of 800 people who play these games, what is the probability that 200 or more
will be over 59 years of age?

19) The Bank of America trends in Consumer Mobility Report indicates that in a typical day, 51% of
users of mobile phones use their phone at least once per hour, 26% use their phone a few times per
day, 8% use their phone morning and evening, and 13% hardly ever use their phones. The
remaining 2% indicated that they did not know how often they used their mobile phone (USA
today, July 7, 2014). Consider a sample of 150 mobile phone users.
a) What is the probability that at least 70 use their phone at least once per hour?
b) What is the probability that at least 75 but less than 80 use their phone at least once per hour?
c) What is the probability that less than 5 of the 150 phone users do not know how often they use
their phone?