CH 06

CHAPTER 6 SECTION 1: PROBABILITY
MULTIPLE CHOICE
1. An approach of assigning probabilities which assumes that all outcomes of the experiment are equally
likely is referred to as the:
a. subjective approach
b. objective approach
c. classical approach
d. relative frequency approach
ANS: C PTS: 1 REF: SECTION 6.1
2. If A and B are mutually exclusive events with P(A) = 0.70, then P(B):
a. can be any value between 0 and 1.
b. can be any value between 0 and 0.70.
c. cannot be larger than 0.30.
d. equals 0.30.
3. If you roll a balanced die 50 times, you should expect an even number to appear:
a. on every other roll.
b. exactly 50 times out of 100 rolls.
c. 25 times on average, over the long term.
d. All of these choices are true.
ANS: D PTS: 1 REF: SECTION 6.1
4. The collection of all possible outcomes of an experiment is called:

a. a simple event
b. a sample space
c. a sample
d. a population
ANS: B PTS: 1 REF: SECTION 6.1
5. Which of the following is an approach to assigning probabilities?

a. Classical approach
b. Relative frequency approach
c. Subjective approach
6. A sample space of an experiment consists of the following outcomes: 1, 2, 3, 4, and 5. Which of the
following is a simple event?
a. At least 3
b. At most 2
c. 3
d. 15
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7. Which of the following is a requirement of the probabilities assigned to outcome Oi?
a. P(Oi)  0 for each i
b. P(Oi)  1 for each i
c. 0  P(Oi)  1 for each i
d. P(Oi) = 1 for each i
8. If an experiment consists of five outcomes with P(O1) = 0.10, P(O2) = 0.20, P(O3) = 0.30, P(O4) =
0.15, then P(O5) is
a. 0.75
b. 0.25
c. 0.50
d. Cannot be determined from the information given.
9. Of the last 500 customers entering a supermarket, 50 have purchased a wireless phone. If the relative
frequency approach for assigning probabilities is used, the probability that the next customer will
purchase a wireless phone is
a. 0.10
b. 0.90
c. 0.50
d. None of these choices.
ANS: A PTS: 1 REF: SECTION 6.1
10. If two events are collectively exhaustive, what is the probability that one or the other occurs?
a. 0.00
b. 0.50
c. 1.00
11. If two events are collectively exhaustive, what is the probability that both occur at the same time?
a. 0.00
b. 0.50
c. 1.00
12. If two events are mutually exclusive, what is the probability that one or the other occurs?
a. 0.00
b. 0.50
c. 1.00
13. If two events are mutually exclusive, what is the probability that both occur at the same time?
a. 0.00
b. 0.50
c. 1.00
14. If two events are mutually exclusive and collectively exhaustive, what is the probability that both
occur?
a. 0.00
b. 0.50
c. 1.00
15. If the two events are mutually exclusive and collectively exhaustive, what is the probability that one or
the other occurs?
a. 0.00
b. 0.50
c. 1.00
16. If events A and B are mutually exclusive and collectively exhaustive, what is the probability that event
A occurs?
a. 0.25
b. 0.50
c. 1.00
17. If two equally likely events A and B are mutually exclusive and collectively exhaustive, what is the
probability that event A occurs?
a. 0.00
b. 0.50
c. 1.00
18. If event A and event B cannot occur at the same time, then A and B are said to be
a. mutually exclusive
b. independent
c. collectively exhaustive
19. The collection of all possible events is called
a. an outcome
b. a sample space
c. an event
TRUE/FALSE
20. P(A) + P(B) = 1 for any events A and B that are mutually exclusive.
ANS: F PTS: 1 REF: SECTION 6.1
21. The relative frequency approach to probability uses long term frequencies, often based on past data.
ANS: T PTS: 1 REF: SECTION 6.1
22. Predicting the outcome of a football game is using the subjective approach to probability.
23. You think you have a 90% chance of passing your next advanced financial accounting exam. This is
an example of subjective approach to probability.
24. The collection of all the possible outcomes of a random experiment is called a sample space.
25. If events A and B cannot occur at the same time, they are called mutually exclusive.
26. If either event A or event B must occur, they are called mutually exclusive.
27. If either event A or event B must occur, then A and B are mutually exclusive and collectively
exhaustive events.
28. If P(A) = 0.4 and P(B) = 0.6, then A and B must be collectively exhaustive.
29. If P(A) = 0.4 and P(B) = 0.6, then A and B must be mutually exclusive.
COMPLETION
30. A random experiment is an action or process that leads to one of several possible
____________________.
ANS: outcomes
PTS: 1 REF: SECTION 6.1
31. The outcomes of a sample space must be ____________________, which means that all possible
outcomes must be included.
ANS: exhaustive
32. The outcomes of a sample space must be ____________________, which means that no two outcomes
can occur at the same time.
ANS: mutually exclusive
33. A(n) ____________________ of a random experiment is a list of all possible outcomes of the
experiment.
ANS: sample space
34. The outcomes of a sample space must be ____________________ and ____________________.
ANS:
exhaustive; mutually exclusive
mutually exclusive; exhaustive
35. There are ____________________ requirements of probabilities for the outcomes of a sample space.
ANS:
two
2
36. An individual outcome of a sample space is called a(n) ____________________ event.
ANS: simple
37. A(n) ____________________ is a collection or set of one or more simple events in a sample space.
ANS: event
38. The probability of an event is the ____________________ of the probabilities of the simple events
that constitute the event.
ANS: sum
39. No matter which approach was used to assign probability (classical, relative frequency, or subjective)
the one that is always used to interpret a probability is the ____________________ approach.
ANS: relative frequency
SHORT ANSWER
40. Abby, Bianca, and Cameron, three candidates for the presidency of a college's student body, are to
address a student forum. The forum's organizer is to select the order in which the candidates will give
their speeches, and must do so in such a way that each possible order is equally likely to be selected.
a. What is the random experiment?

b. List the outcomes in the sample space.
c. Assign probabilities to the outcomes.
d. What is the probability that Cameron will speak first?
e. What is the probability that Abby will speak before Cameron does?
ANS:
a. The random experiment is to observe the order in which the three candidates give their
speeches.
b. S = {ABC, ACB, BAC, BCA, CAB, CBA}, where A = Abby, B = Bianca, and C = Cameron.
c. The probability assigned to each outcome is 1/6.
d. P(CAB, CBA) = 1/3
e. P(ABC, ACB, BAC) = 1/2
41. There are three approaches to determining the probability that an outcome will occur: classical,
relative frequency, and subjective. For each situation that follows, determine which approach is most
appropriate.
a. An American will win the French Open Tennis Tournament next year.
b. The probability of getting any single number on a balanced die is 1/6.
c. Based on the past, it's reasonable to assume the average book sales for a certain textbook
is 5,000 copies per month.
ANS:
a. subjective
b. classical
c. relative frequency
Appliance Store Sales
Sales records of an appliance store showed the following number of dishwashers sold weekly for each
of the last 50 weeks.
Number of Number of Weeks

Dishwashers Sold
0 20
1 15
2 10
3 4
4 1
42. {Appliance Store Sales Narrative} Define the random experiment of interest to the store.
ANS:
The random experiment consists of observing the number of dishwashers sold in any given week.
43. {Appliance Store Sales Narrative} List the outcomes in the sample space.
ANS:
S = {0, 1, 2, 3, 4}
44. {Appliance Store Sales Narrative} What approach would you use in determining the probabilities for
next week's sales? Assign probabilities to the outcomes.
ANS:
The relative frequency approach was used.
Number of Prob.
Dishwashers
0 0.40
1 0.30
2 0.20
3 0.08
4 0.02
45. {Appliance Store Sales Narrative} What is the probability of selling at least two dishwashers in any
given week?
ANS:
P{2, 3, 4} = 0.30
46. {Appliance Store Sales Narrative} What is the probability of selling between 1 and 3 (inclusive)
dishwashers in any given week?
ANS:
P{1,2,3} = 0.58
Stock's Price
An investor estimates that there is a 75% chance that a particular stock's price will increase to $100 per
share over the next three weeks, based past data.
47. {Stock's Price Narrative} Which approach was used to produce this figure?
ANS:
The relative frequency approach
48. {Stock's Price Narrative} Interpret the 75% probability.
ANS:
We interpret the 75% figure to mean that if we had an infinite number of stocks with exactly the same
economic and market characteristics as the one the investor will buy, 75% of them will increase in
price to $100 over the next three weeks.
49. The sample space of the toss of a balanced coin is S = {1, 2, 3, 4, 5, 6}. If the die is balanced, each
simple event (outcome) has the same probability. Find the probability of the following events:
a. Rolling an odd number

b. Rolling a number less than or equal to 3
c. Rolling a number greater than or equal to 5
d. Rolling a number between 2 and 5, inclusive.
ANS:
a. 3/6
b. 3/6
c. 2/6
d. 4/6
Interest Rates
A survey of banks estimated the following probabilities for the interest rate being charged on a home
loan based on a 30-year mortgage, based on past records.
Interest Rate 6.0% 6.5% 7.0% 7.5% >7.5%

Probability 0.20 0.23 0.25 0.28 .04
50. {Interest Rates Narrative} If a bank is selected at random from this distribution, what is the probability
that the interest rate charged on a home loan exceeds 7.0%?
ANS:
0.32
51. {Interest Rates Narrative} What is the most common interest rate?
ANS:
7.5%, since it occurred 28% of the time.
52. {Interest Rates Narrative} What approach was used in estimating the probabilities for the interest
rates?
ANS:
relative frequency approach
MULTIPLE CHOICE
53. Which of the following best describes the concept of marginal probability?
a. It is a measure of the likelihood that a particular event will occur, regardless of whether
another event occurs.
b. It is a measure of the likelihood that a particular event will occur, if another event has
already occurred.
c. It is a measure of the likelihood of the simultaneous occurrence of two or more events.
54. The intersection of events A and B is the event that occurs when:
a. either A or B occurs but not both
b. neither A nor B occur
c. both A and B occur
55. The probability of the intersection of two events A and B is denoted by P(A and B) and is called the:
a. marginal probability
b. joint probability
c. conditional probability of A given B
d. conditional probability of B given A
56. The probability of event A gives event B is denoted by

a. P(A and B)
b. P(A or B)
c. P(A|B)
d. P(B|A)
57. Which of the following is equivalent to P(A|B)?

a. P(A and B)
b. P(B|A)
c. P(A)/P(B)
58. If two events are independent, what is the probability that they both occur?
a. 0
b. 0.50
c. 1.00
d. Cannot be determined from the information given
59. If the outcome of event A is not affected by event B, then events A and B are said to be
a. mutually exclusive
b. independent
c. collectively exhaustive
60. If A and B are disjoint events with P(A) = 0.70, then P(B):
a. can be any value between 0 and 1
b. can be any value between 0 and 0.70
c. cannot be larger than 0.30
d. cannot be determined with the information given
61. If P(A) = 0.65, P(B) = 0.58, and P(A and B) = 0.76, then P(A or B) is:
a. 1.23
b. 0.47
c. 0.18
d. 0.11
62. Suppose P(A) = 0.50, P(B) = 0.75, and A and B are independent. The probability of the complement of
the event (A and B) is:
a. .5  .25 = .125
b. 0.50 + .25 = .75
c. 1  (.50 + .25) = .25
d. 1  (.5  .75) = .625
63. Which of the following statements is correct if the events A and B have nonzero probabilities?
a. A and B cannot be both independent and disjoint
b. A and B can be both independent and disjoint
c. A and B are always independent
d. A and B are always disjoint
64. A and B are disjoint events, with P(A) = 0.20 and P(B) = 0.30. Then P(A and B) is:
a. 0.50
b. 0.10
c. 0.00
d. 0.06
65. If P(A) = 0.35, P(B) = 0.45, and P(A and B) = 0.25, then P(A|B) is:
a. 1.4
b. 1.8
c. 0.714
d. 0.556
66. If A and B are independent events with P(A) = 0.60 and P(A|B) = 0.60, then P(B) is:
a. 1.20
b. 0.60
c. 0.36
d. cannot be determined with the information given
67. If A and B are independent events with P(A) = 0.20 and P(B) = 0.60, then P(A|B) is:
a. 0.20
b. 0.60
c. 0.40
d. 0.80
68. If P(A) = 0.25 and P(B) = 0.65, then P(A and B) is:
a. 0.25
b. 0.40
c. 0.90
d. cannot be determined from the information given
Pets
Suppose X = the number of pets owned by a family in the U.S. The probability distribution of X is
shown in the table below.
X 0 1 2 3
Probability 0.56 0.23 0.12 0.09
69. {Pets Narrative}What is the chance that a family owns more than one pet?
a. 0.23
b. 0.21
c. 0.44
70. {Pets Narrative} Suppose you choose two families at random. What is the chance that they each own
one pet? (That means family A owns a pet and family B owns a pet.)
a. 0.23
b. 0.23 + 0.23 = 0.46
c. 0.23 + 0.23  (0.23)*(0.23) = .4071
d. (0.23)*(0.23) = 0.0529
TRUE/FALSE
71. Two or more events are said to be independent when the occurrence of one event has no effect on the
probability that another will occur.
72. If A and B are independent events with P(A) = 0.35 and P(B) = 0.55, then P(A|B) is 0.35/0.55 = .64.
73. The union of events A and B is the event that occurs when either A or B or both occur. It is denoted as
'A or B'.
74. Two events A and B are said to be independent if P(A|B) = P(B).
75. The conditional probability of event B given event A is denoted by P(A|B).
76. If A and B are independent events with P(A) = .40 and P(B) = .50, then P(A and B) = .20.
77. If P(A) = .30, P(B) = .60, and P(A and B) = .20, then P(A|B) = .40.
78. The intersection of two events A and B is the event that occurs when both A and B occur.
79. The probability of the intersection is called a joint probability.
80. The union of events A and B is the event that occurs when either A or B occurs but not both.
81. Two events A and B are independent if P(A and B) = 0.
82. If A and B are independent, then P(A|B) = P(A) or P(B|A) = P(B).
83. Suppose the probability that a person owns both a cat and a dog is 0.10. Also suppose the probability
that a person owns a cat but not a dog is 0.20. The marginal probability that someone owns a cat is
0.30.
COMPLETION
84. The ____________________ of events A and B is the event that occurs when both A and B occur.
ANS: intersection
85. The probability of an intersection of two events is called a(n) ____________________ probability.
ANS: joint
86. Suppose two events A and B are related. The ____________________ probability of A is the
probability that A occurs, regardless of whether event B occurred or not.
ANS: marginal
87. If two events are mutually exclusive, their joint probability is ____________________.
ANS:
zero
0
88. A conditional probability of A given B is written in probability notation as ____________________.
ANS: P(A|B)
89. If A and B are independent, then P(A|B) = ____________________.
ANS: P(A)
90. The ____________________ of two events A and B is the event that occurs when either A or B or both
occur.
ANS: union
91. If A and B are mutually exclusive, their joint probability is ____________________.
ANS:
0
zero
92. P(A|B) is the conditional probability of ____________________ given ____________________.
ANS: A; B
93. If P(A|B) = P(A) then events A and B are ____________________.
ANS: independent
SHORT ANSWER
Subscribers
A survey of a magazine's subscribers indicates that 50% own a home, 80% own a car, and 90% of the
homeowners who subscribe also own a car.
94. {Subscribers Narrative} What is the probability that a subscriber owns both a car and a house?
ANS:
.45
95. {Subscribers Narrative} What is the probability that a subscriber owns a car or a house, or both?
ANS:
.85
96. {Subscribers Narrative} What is the probability that a subscriber owns neither a car nor a house?
ANS:
.15
Business Majors
Suppose 30% of business majors major in accounting. You take a random sample of 3 business
majors.
97. {Business Majors Narrative} What is the chance that they all major in accounting?
ANS:
.027
98. {Business Majors Narrative} What is the chance that at least one majors in accounting?
ANS:
.657
99. {Business Majors Narrative} What is the chance that exactly one majors in accounting?
ANS:
.441
100. {Business Majors Narrative} What is the chance that none of them major in accounting?
ANS:
.343
Coffee and Soft Drinks
Suppose 55 percent of adults drink coffee, 45 percent drink soft drinks, and 10 percent drink both.
101. {Coffee and Soft Drinks Narrative} What is the probability that a randomly chosen adult does not
drink soft drinks?
ANS:
.55
102. {Coffee and Soft Drinks Narrative} What is the probability that a randomly chosen adult drinks soft
drinks or coffee or both?
ANS:
.90
103. {Coffee and Soft Drinks Narrative} What is the probability that a randomly chosen adult doesn't drink
coffee or soft drinks?
ANS:
.10
Drunk Drivers
Five hundred accidents that occurred on a Saturday night were analyzed. Two items noted were the
number of vehicles involved and whether alcohol played a role in the accident. The numbers are
shown below:
Number of Vehicles Involved

Did alcohol play a role? 1 2 3 Totals
Yes 60 100 30 200
No 40 215 45 300
Totals 100 325 75 500
104. {Drunk Drivers Narrative} What proportion of accidents involved more than one vehicle?
ANS:
400/500 or .80
105. {Drunk Drivers Narrative} What proportion of accidents involved alcohol and single vehicle?
ANS:
60/500 or .12
106. {Drunk Drivers Narrative} What proportion of accidents involved alcohol or a single vehicle?
ANS:
240/500 or .48
107. {Drunk Drivers Narrative} Given alcohol was involved, what proportion of accidents involved a single
vehicle?
ANS:
60/200 or .30
108. {Drunk Drivers Narrative} If multiple vehicles were involved, what proportion of accidents involved
alcohol?
ANS:
140/400 or .35
109. {Drunk Drivers Narrative} If 3 vehicles were involved, what proportion of accidents involved alcohol?
ANS:
30/75 or .40
110. {Drunk Drivers Narrative} If alcohol was not involved, what proportion of the accidents were single
vehicle?
ANS:
40/300 or .133
111. {Drunk Drivers Narrative} If alcohol was not involved, what proportion of the accidents were multiple
vehicle?
ANS:
260/300 or .867
112. Suppose A and B are two independent events for which P(A) = 0.20 and P(B) = 0.60.
a. Find P(A|B).
b. Find P(B|A).
ANS:
a. 0.20
b. 0.60
GPA and Class
A statistics professor classifies his students according to their grade point average (GPA) and their
class rank. GPA is on a 0.0-4.0 scale, and class rank is defined as the under class (freshmen and
sophomores) and the upper class (juniors and seniors). One student is selected at random.
GPA
Class Under 2.0 2.0 - 3.0 Over 3.0
Under 0.05 0.25 0.10
Upper 0.10 0.30 0.20
113. {GPA and Class Narrative} If the student selected is in the upper class, what is the probability that her
GPA is between 2.0 and 3.0?
ANS:
0.50
114. {GPA and Class Narrative} If the GPA of the student selected is over 3.0, what is the probability that
the student is in the lower class?
ANS:
0.333
115. {GPA and Class Narrative} What is the probability that the student is in the upper class?
ANS:
0.60
116. {GPA and Class Narrative} What is the probability that the student has GPA over 3.0?
ANS:
0.30
117. {GPA and Class Narrative} What is the probability that the student is in the lower class?
ANS:
0.40
118. {GPA and Class Narrative} What is the probability that the student is in the lower class and has GPA
over 3.0?
ANS:
0.10
119. {GPA and Class Narrative} What is the probability that the student is in the upper class and has GPA
under 2.0?
ANS:
10
120. {GPA and Class Narrative} Are being in the upper class and having a GPA over 3.0 related? Explain.
ANS:
Yes, since the product of the probabilities of the two events is not equal to the joint probability.
Marital Status
An insurance company has collected the following data on the gender and marital status of 300
customers.
Marital Status
Gender Single Married Divorced
Male 25 125 30
Female 50 50 20
Suppose that a customer is selected at random.
121. {Marital Status Narrative} Develop the joint probability table.
ANS:

Male .083 .417 .100
Female .167 .167 .067
122. {Marital Status Narrative} Find the probability that the customer selected is a married female.
ANS:
0.167
123. {Marital Status Narrative} Find the probability that the customer selected is
a. female and single

b. married if the customer is male.
c. not single
ANS:
a. 0.167
b. 0.695
c. 0.750
Investment
An investment firm has classified its clients according to their gender and the composition of their
investment portfolio (primarily bonds, primarily stocks, or a balanced mix of bonds and stocks). The
proportions of clients falling into the various categories are shown in the following table:
Portfolio Composition
Gender Bonds Stocks Balanced
Male 0.18 0.20 0.25
Female 0.12 0.10 0.15
One client is selected at random, and two events A and B are defined as follows:
A: The client selected is male.
B: The client selected has a balanced portfolio.
124. {Investment Narrative} Find the following probabilities:
a. P(A)
b. P(B)
ANS:
a. 0.63
b. 0.40
125. {Investment Narrative} Express each of the following events in words:
a. A or B
b. A and B
ANS:
a. The client selected either is male or has a balanced portfolio or both.

b. The client selected is male and has a balanced portfolio.
126. {Investment Narrative} Find P(A and B).
ANS:
0.25
127. {Investment Narrative} Express each of the following probabilities in words:
a. P(A|B)
b. P(B|A)
ANS:
a. The probability that the employee selected is male, if the employee has a balanced
portfolio.
b. The probability that the employee selected has a balanced portfolio, if the employee is
male.
128. {Investment Narrative} Find the following probabilities:
a. P(A|B)
b. P(B|A)
ANS:
a. 0.625
b. 0.3968
MULTIPLE CHOICE
129. If P(A) = 0.84, P(B) = 0.76, and P(A or B) = 0.90, then P(A and B) is:
a. 0.06
b. 0.14
c. 0.70
d. 0.83
130. If P(A) = 0.20, P(B) = 0.30, and P(A and B) = 0, then A and B are:
a. dependent events
b. independent events
c. mutually exclusive events
d. complementary events
131. If P(A) = 0.65, P(B) = 0.58, and P(A and B) = 0.76, then P(A or B) is:
a. 1.23
b. 0.47
c. 0.24
132. Suppose P(A) = 0.35. The probability of the complement of A is:

a. 0.35
b. 0.65
c. 0.35
133. If the events A and B are independent with P(A) = 0.30 and P(B) = 0.40, then the probability that both
events will occur simultaneously is:
a. 0
b. 0.12
c. 0.70
d. Not enough information to tell.
134. If events A and B are independent then:

a. P(A and B) = P(A) * P(B)
b. P(A and B) = P(A) + P(B)
c. P(B|A) = P(A)
135. Two events A and B are said to be mutually exclusive if:
a. P(A|B) = 1
b. P(A|B) = P(A)
c. P(A and B) =1
d. P(A and B) = 0
136. Which of the following statements is always correct?

a. P(A and B) = P(A) * P(B)
b. P(A or B) = P(A) + P(B)
c. P(A) = 1  P(Ac)
137. If A and B are mutually exclusive events, with P(A) = 0.20 and P(B) = 0.30, then the probability that
both events will occur simultaneously is:
a. 0.50
b. 0.06
c. 0
138. If A and B are independent events with P(A) = 0.60 and P(B) = 0.70, then P(A or B) equals:
a. 1.30
b. 0.88
c. 0.42
d. Cannot tell from the given information.
139. If A and B are mutually exclusive events with P(A) = 0.30 and P(B) = 0.40, then P(A or B) is:
a. 0.10
b. 0.12
c. 0.70
d. None of these choices
140. If A and B are any two events with P(A) = .8 and P(B|A) = .4, then P(A and B) is:
a. .40
b. .32
c. 1.20
141. If A and B are any two events with P(A) = .8 and P(B|Ac) = .7, then P(Ac and B) is
a. 0.56
b. 0.14
c. 1.50
TRUE/FALSE
142. If the event of interest is A, the probability that A will not occur is the complement of A.
143. Assume that A and B are independent events with P(A) = 0.30 and P(B) = 0.50. The probability that
both events will occur simultaneously is 0.80.
144. Two events A and B are said to be independent if P(A) = P(A|B).
145. Two events A and B are said to be independent if P(A|B) = P(B).
146. Two events A and B are said to be independent if P(A|B) = P(B|A).
147. Two events A and B are said to be mutually exclusive if P(A and B) = 1.0.
148. If events A and B have nonzero probabilities, then they can be both independent and mutually
exclusive.
149. The probability of the union of two mutually exclusive events A and B is 0.
150. If A and B are two independent events with P(A) = 0.9 and P(B|A) = 0.5, then P(A and B) = 0.45.
151. Jim and John go to a coffee shop during their lunch break and toss a balanced coin to see who will pay.
The probability that John will pay three days in a row is 0.125.
152. When A and B are mutually exclusive, P(A or B) can be found by adding P(A) and P(B).
153. If P(A and B) = 1, then A and B must be mutually exclusive.

154. Events A and B are either independent or mutually exclusive.
155. If P(B) = .7 and P(B|A) = .4, then P(A and B) must be .28.
156. If P(B) = .7 and P(A|B) = .7, then P(A and B) = 0.
COMPLETION
157. The ____________________ rule says that P(Ac) = 1  P(A).
ANS: complement
158. The ____________________ rule is used to calculate the joint probability of two events.
ANS: multiplication
159. If A and B are ____________________ events, the joint probability of A and B is the product of the
probabilities of those two events.
ANS: independent
160. The ____________________ rule is used to calculate the probability of the union of two events.
ANS: addition
161. If A and B are ____________________ then the probability of the union of A and B is the sum of their
individual probabilities.
ANS: mutually exclusive
162. The first set of branches of a probability tree represent ____________________ probabilities.
ANS: marginal

163. The second set of branches of a probability tree represent ____________________ probabilities.
ANS: conditional
164. When you multiply a first level branch with a second level branch on a probability tree you get a(n)
____________________ probability.
ANS: joint
165. If two events are complements, their probabilities sum to ____________________.
ANS:
one
1
166. If two events are mutually exclusive their joint probability is ____________________.
ANS:
zero
0
SHORT ANSWER
167. Suppose A and B are two independent events for which P(A) = 0.20 and P(B) = 0.60.
a. Find P(A and B).

b. Find P(A or B).
ANS:
a. 0.12
b. 0.68
University Job
A Ph.D. graduate has applied for a job with two universities: A and B. The graduate feels that she has a
60% chance of receiving an offer from university A and a 50% chance of receiving an offer from
university B. If she receives an offer from university B, she believes that she has an 80% chance of
receiving an offer from university A. Let A = receiving an offer from university A, and let B =
receiving an offer from university B.
168. {University Job Narrative} What is the probability that both universities will make her an offer?
ANS:
(.5)(.8) = 0.40
169. {University Job Narrative} What is the probability that at least one university will make her an offer?
ANS:
6 + .5  .4 = 0.7
170. {University Job Narrative} If she receives an offer from university B, what is the probability that she
will not receive an offer from university A?
ANS:
1  0.8 = 0.2.
171. Suppose P(A) = 0.50, P(B) = 0.40, and P(B|A) = 0.30.
a. Find P(A and B).
b. Find P(A or B).
c. Find P(A|B).
ANS:
a. 0.15
b. 0.75
c. 0.375
172. A survey of a magazine's subscribers indicates that 50% own a house, 80% own a car, and 90% of the
homeowners also own a car. What proportion of subscribers:
a. own both a car and a house?

b. own a car or a house, or both?
c. own neither a car nor a house?
ANS:
a. 0.45
b. 0.85
c. 0.15
173. Suppose A and B are two mutually exclusive events for which P(A) = 0.30 and P(B) = 0.40.
a. Find P(A and B).

b. Find P(A or B).
c. Are A and B independent events? Explain using probabilities.
ANS:
a. 0
b. 0.70
c. No. P(A and B) = 0 because they are mutually exclusive events. If they were independent
events, you would have P(A and B) = P(A) * P(B) = 0.12.
174. Suppose P(A) = 0.30, P(B) = 0.50, and P(B|A) = 0.60.
a. Find P(A and B).

b. Find P(A or B).
c. Find P(A|B).
ANS:
a. 0.18
b. 0.62
c. 0.36
175. Is it possible to have two events for which P(A) = 0.40, P(B) = 0.50, and P(A or B) = 0.30? Explain.
ANS:
Yes. In this situation, if P(A and B) = 0.60 it works.
176. A pharmaceutical firm has discovered a new diagnostic test for a certain disease that has infected 1%
of the population. The firm has announced that 95% of those infected will show a positive test result,
while 98% of those not infected will show a negative test result.
a. What proportion of people don't have the disease?

b. What proportion who have the disease test negative?
c. What proportion of those who don't have the disease test positive?
d. What proportion of test results are incorrect?
e. What proportion of test results are correct?
ANS:
a. 0.99
b. 0.05
c. 0.02
d. 0.0203
e. 0.9797
Marital Status
An insurance company has collected the following data on the gender and marital status of 300
customers.
Marital Status
Male 25 125 30
Female 50 50 20
Suppose that a customer is selected at random.
177. {Marital Status Narrative} Find the probability that the customer selected is female or divorced.
ANS:
0.50
178. {Marital Status Narrative} Are gender and marital status mutually exclusive? Explain using
probabilities.
ANS:
No, since P(female and married) = 0.167 > 0. (Any other combination shows this also.)
179. {Marital Status Narrative} Is marital status independent of gender? Explain using probabilities.
ANS:
No, since P(married / male) = 0.694  P(married) = 0.583. (Any other combination shows this also.)
Company Bids
A construction company has submitted bids on two separate state contracts, A and B. The company
feels that it has a 60% chance of winning contract A, and a 50% chance of winning contract B.
Furthermore, the company believes that it has an 80% chance of winning contract A if it wins contract
B.
180. {Company Bids Narrative} What is the probability that the company will win both contracts?
ANS:
P(B and A) = P(B) * P(A|B) = (.50)(.80) = .40
181. {Company Bids Narrative} What is the probability that the company will win at least one of the two
contracts?
ANS:
P(A or B) = P(A) + P(B)  P(A and B) = .60 + .50  .40 = .70
182. {Company Bids Narrative} If the company wins contract B, what is the probability that it will not win
contract A?
ANS:
P(Ac|B) = 1  P(A|B) = 1  .80 = .20
183. {Company Bids Narrative} What is the probability that the company will win at most one of the two
contracts?
ANS:
1  P(A and B) = 0.60
184. {Company Bids Narrative} What is the probability that the company will win neither contract?
ANS:
1  P(A or B) = 0.30
House Sales and Interest Rates
The probability that house sales will increase in the next 6 months is estimated to be 0.30. The
probability that the interest rates on housing loans will go up in the same period is estimated to be
0.75. The probability that house sales or interest rates will go up during the next 6 months is estimated
to be 0.90.
185. {House Sales and Interest Rates Narrative} What is the probability that both house sales and interest
rates will increase during the next six months?
ANS:
0.15
186. {House Sales and Interest Rates Narrative} What is the probability that neither house sales nor interest
rates will increase during the next six months?
ANS:
0.10
187. {House Sales and Interest Rates Narrative} What is the probability that house sales will increase but
interest rates will not during the next six months?
ANS:
0.15
CHAPTER 6 SECTION 4-5: PROBABILITY
MULTIPLE CHOICE
188. A posterior probability value is a prior probability value that has been:
a. modified on the basis of new information.
b. multiplied by a conditional probability value.
c. divided by a conditional probability value.
d. added to a conditional probability value.
ANS: A PTS: 1 REF: SECTION 6.4-6.5
189. Which of the following statements is false?

a. Thomas Bayes first employed the calculation of conditional probability in the eighteenth
century.
b. There is no formula defining Bayes' Law.
c. We use a probability tree to conduct all necessary calculations for Bayes' Law.
ANS: B PTS: 1 REF: SECTION 6.4-6.5
190. Which of the following statements is false regarding a scenario using Bayes' Law?
a. Prior probabilities are called likelihood probabilities.
b. Conditional probabilities are called posterior probabilities.
c. Posterior probabilities are calculated by using prior probabilities that have been modified
based on new information.
ANS: A PTS: 1 REF: SECTION 6.4-6.5
191. Bayes' Law is used to compute:

a. prior probabilities.
b. joint probabilities.
c. union probabilities.
d. posterior probabilities.
ANS: D PTS: 1 REF: SECTION 6.4-6.5
192. Initial estimates of the probabilities of events are known as:

a. joint probabilities
b. posterior probabilities
c. prior probabilities
d. conditional probabilities
ANS: C PTS: 1 REF: SECTION 6.4-6.5
TRUE/FALSE
193. Bayes' Law allows us to compute conditional probabilities from other forms of probability.
ANS: T PTS: 1 REF: SECTION 6.4-6.5

194. Although there is a formula defining Bayes' law, you can also use a probability tree to conduct
calculations.
195. Conditional probabilities are also called likelihood probabilities.
196. In applying Bayes' Law, as the prior probabilities increase, the posterior probabilities decrease.
ANS: F PTS: 1 REF: SECTION 6.4-6.5
197. Bayes' Law is a formula for revising an initial subjective (prior) probability value on the basis of new
results, thus obtaining a new (posterior) probability value.
198. Prior probability of an event is the probability of the event before any information affecting it is given.
199. Prior probability is also called likelihood probability.
200. Posterior probability of an event is the revised probability of the event after new information is
available.
201. In general, a posterior probability is calculated by adding the prior and likelihood probabilities.
202. Bayes' Law says that P(A|B) = P(B|A)P(A).
203. In problems where the joint probabilities are given, we can compute marginal probabilities by adding
across rows and down columns.
204. We can use the joint and marginal probabilities to compute conditional probabilities, for which a
formula is available.
205. If joint, marginal, and conditional probabilities are available, only joint probabilities can be used to
determine whether two events are dependent or independent.
206. Suppose we have two events A and B. We can apply the addition rule to compute the probability that at
least one of these events occurs.
207. We can apply the multiplication rule to compute the probability that two events occur at the same time.
208. Posterior probabilities can be calculated using the addition rule for mutually exclusive events.
209. Bayes' Law can be used to calculate posterior probabilities, prior probabilities, as well as new
conditional probabilities.
210. Prior probabilities can be calculated using the multiplication rule for mutually exclusive events.
COMPLETION
211. Thomas ____________________ first employed the calculation of conditional probability.
ANS: Bayes
PTS: 1 REF: SECTION 6.4-6.5
212. Bayes' Law involves three different types of probabilities: 1) prior probabilities; 2) likelihood
probabilities; and 3) ____________________ probabilities.
ANS: posterior
213. Bayes' Law involves three different types of probabilities: 1) ____________________ probabilities; 2)
likelihood probabilities; and 3) posterior probabilities.
ANS: prior
214. Bayes' Law involves three different types of probabilities: 1) prior probabilities;
2) ____________________ probabilities; and 3) posterior probabilities.
ANS: likelihood
215. There are situations where we witness a particular event and we need to compute the probability of one
of its possible causes. ____________________ is the technique we use to do this.
ANS:
Bayes' Law
Bayes Law
Baye's Law
216. In the scenario of Bayes' Law, P(A|B) is a(n) ____________________ probability, while P(B|A) is a
posterior probability.
ANS: likelihood
217. In the scenario of Bayes' Law, P(A|B) is a posterior probability, while P(B|A) is a(n)
____________________ probability.
ANS: likelihood
218. ____________________ can find the probability that someone with a disease tests positive by using
(among other things) the probability that someone who actually has the disease tests positive for it.
ANS:
Bayes' Law
Bayes Law
Baye's Law
SHORT ANSWER
Admissions Test
A standard admissions test was given at three locations. One thousand students took the test at location
A, 600 students at location B, and 400 students at location C. The percentages of students from
locations A, B, and C who passed the test were 70%, 68%, and 77%, respectively. One student is
selected at random from among those who took the test.
219. {Admissions Test Narrative} What is the probability that the selected student passed the test?
ANS:
(.5)(.7) + (.3)(.68) + (.2)(.77) = 0.708
220. {Admissions Test Narrative} If the selected student passed the test, what is the probability that the
student took the test at location B?
ANS:
(.3)(.68) / .708 = 0.288
221. {Admissions Test Narrative} What is the probability that the selected student took the test at location
C and failed?
ANS:
(.2)(.23) = 0.046
Tumors
After researching tumors of a particular type, a doctor learns that out of 10,000 such tumors examined,
1,500 are malignant and 8,500 are benign. A diagnostic test is available which is accurate 80% of the
time (whether the tumor is malignant or not). The doctor has discovered the same type of tumor in a
patient.
222. {Tumors Narrative} In the absence of any test, what is the probability that the tumor is malignant?
ANS:
M = Malignant, P(M) = .15
223. {Tumors Narrative} In the absence of any test, what is the probability that the tumor is benign?
ANS:
B = Benign, P(B) = .85
224. {Tumors Narrative} What is the probability that the patient will test positive?
ANS:
P(+) = P(+ and M) + P(+ and B) = P(+/M) · P(M) + P(+/B) · P(B)
= (.80)(.15) + (.20)(.85) = .29
225. {Tumors Narrative} What is the probability that the patient will test negative?
ANS:
P() = 1  P(+) = 1  .29 = .71 or
P() = P( and M) + P( and B) = P(/M) · P(M) + P(/B) · P(B)
= (.20)(.15) + (.80)(.85) = .71
226. {Tumors Narrative} What is the probability that the patient has a benign tumor if he or she tests
positive?
ANS:
P(B/+) = P(+ and B) / P(+) = P(+/B) · P(B) / P(+) = (.20)(.85) / (.29) = .586
227. {Tumors Narrative} What is the probability that the patient has a malignant tumor if he or she tests
negative?
ANS:
P(M/) = P( and M) / P() = P(/M) · P(M) / P() = (.20)(.15) / (.71) = .042
Airlines
Three airlines serve a small town in Indiana. Airline A has 60% of all the scheduled flights, airline B
has 30%, and airline C has the remaining 10%. Their on-time rates are 80%, 60%, and 40%
respectively. Define event O as an airline arrives on time.
228. {Airlines Narrative} Calculate P(A and O).
ANS:
P(A and O) = P(A)P(O|A) = (.60)(.80) = 0.48
229. {Airlines Narrative} Calculate P(B and O).
ANS:
P(B and O) = P(B) P(O|B) = (.30)(.60) = 0.18
230. {Airlines Narrative} Calculate P(C and O).
ANS:
P(C and O) = P(C)P(O |C) = (.10)(.40) = 0.04
231. {Airlines Narrative} Calculate the probability that a plane leaves on time.
ANS:
P(O) = P(A and O) + P(B and O) + P(C and O) = .48 + .18 + .04 = 0.70
232. {Airlines Narrative} If a plane has just left on time, what is the probability that it was airline A?
ANS:
P(A|O) = P(A and O) / P(O) = 0.48 / 0.70 = 0.686
233. {Airlines Narrative} If a plane has just left on time, what is the probability that it was airline B?
ANS:
P(B|O) = P(B and O) / P(O) = 0.18 / 0.70 = 0.257
234. {Airlines Narrative} If a plane has just left on time, what is the probability that it was airline C?
ANS:
P(C|O) = P(C and O) / P(O) = 0.04 / 0.70 = 0.057
235. {Airlines Narrative} If a plane has just left 40 minutes late, what is the probability that it was airline
A?
ANS:
P(A|Oc) = P(A and Oc) / P(Oc) = (0.60)(0.20) / 0.30 = 0.40
B?
ANS:
P(B|Oc) = P(B and Oc) / P(Oc) = (0.30)(0.40) / 0.30 = 0.40
C?
ANS:
P(C|Oc) = P(C and Oc) / P(Oc) = (0.10)(0.60) / 0.30 = 0.20

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CHAPTER 6 SECTION 1: PROBABILITY

4. The collection of all possible outcomes of an experiment is called:

5. Which of the following is an approach to assigning probabilities?

ANS: F PTS: 1 REF: SECTION 6.1

ANS: T PTS: 1 REF: SECTION 6.1

ANS: T PTS: 1 REF: SECTION 6.1

ANS: T PTS: 1 REF: SECTION 6.1

ANS: T PTS: 1 REF: SECTION 6.1

ANS: T PTS: 1 REF: SECTION 6.1

ANS: F PTS: 1 REF: SECTION 6.1

ANS: T PTS: 1 REF: SECTION 6.1

ANS: F PTS: 1 REF: SECTION 6.1

ANS: F PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

ANS: mutually exclusive

PTS: 1 REF: SECTION 6.1

ANS: sample space

PTS: 1 REF: SECTION 6.1

34. The outcomes of a sample space must be ____________________ and ____________________.

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

36. An individual outcome of a sample space is called a(n) ____________________ event.

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

ANS: relative frequency

PTS: 1 REF: SECTION 6.1

a. What is the random experiment?

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

Appliance Store Sales

Number of Number of Weeks

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

48. {Stock's Price Narrative} Interpret the 75% probability.

PTS: 1 REF: SECTION 6.1

a. Rolling an odd number

PTS: 1 REF: SECTION 6.1

Interest Rate 6.0% 6.5% 7.0% 7.5% >7.5%

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

PTS: 1 REF: SECTION 6.1

CHAPTER 6 SECTION 2: PROBABILITY

56. The probability of event A gives event B is denoted by

57. Which of the following is equivalent to P(A|B)?

ANS: T PTS: 1 REF: SECTION 6.2

ANS: F PTS: 1 REF: SECTION 6.2

ANS: T PTS: 1 REF: SECTION 6.2

74. Two events A and B are said to be independent if P(A|B) = P(B).

ANS: F PTS: 1 REF: SECTION 6.2

75. The conditional probability of event B given event A is denoted by P(A|B).

ANS: F PTS: 1 REF: SECTION 6.2

ANS: T PTS: 1 REF: SECTION 6.2

ANS: F PTS: 1 REF: SECTION 6.2

ANS: T PTS: 1 REF: SECTION 6.2

79. The probability of the intersection is called a joint probability.

ANS: T PTS: 1 REF: SECTION 6.2

34. The outcomes of a sample space must be and .

92. P(A|B) is the conditional probability of given .