Lê Thị Thiên Hương – MAMAIU22014

HOMEWORK 2
Chapter 3:
Q52. Suppose that an insurance company classifies people into one of three classes: good risks, average
risks, and bad risks. The company’s records indicate that the probabilities that good-, average-, and bad-
risk persons will be involved in an accident over a 1-year span are, respectively, .05, .15, and .30. If 20
percent of the population is a good risk, 50 percent an average risk, and 30 percent a bad risk, what
proportion of people have accidents in a fixed year? If policyholder had no accidents in 2012, what is the
probability that he or she is a good risk? is an average risk?
Denote:
P(G): the probability of being a good risk = 0.2
P(A): the probability of being an average risk = 0.5
P(B): the probability of being a bad risk = 0.3
P(accident | G): the probability of having an accident given that someone is a good risk = 0.05
P(accident | A): the probability of having an accident given that someone is an average risk = 0.15
P(accident | B): the probability of having an accident given that someone is a bad risk = 0.3
The proportion of people who have accidents in a fixed year is:

P ( accident ) =P (G ) × P ( accident|G ) + P ( A ) × P ( accident| A ) + P ( B ) × P ( accident|B )= ( 0.2× 0.05 ) + ( 0.5 ×0.15 )+ ( 0.

= 0.175
Chapter 4:
Q1. Two balls are chosen randomly from an urn containing 8 white, 4 black, and 2 orange balls. Suppose
that we win $2 for each black ball selected and we lose $1 for each white ball selected. Let X denote our
winnings. What are the possible values of X, and what are the probabilities associated with each value?
Denote:
B1: first ball selected is black

B2: second ball selected is black

W 1: first ball selected is white

W 2 : second ball selected is white

O1: first ball selected is orange

O 2: second ball selected is orange

Given:
8 white balls
4 black balls
2 orange balls
Possible value of X:
1. If both balls are black: winnings = 2 + 2 = 4
2. If one ball is black and the other is white: winnings = 2 – 1 = 1
3. If both balls are white: winnings = -1 – 1 = -2
4. If one ball is black and the other is orange: winnings = 2 – 0 = 2
5. If one ball is white and the other is orange: winnings = -1 – 0 = -1
6. If both balls are orange: winnings = 0
The probability of each value:
1. The probability of both balls being black:
4 3 6
P ( 4 )=P ( B1 ∩ B2 ) = × =
14 13 91
2. The probability of one ball being black and the other being white:
4 8 8 4 32
P ( 1 )=P ( ( B1 ∩W 2 ) ∪ ( W 1 ∩B 2) )= × + × =
14 13 14 13 91
3. The probability of both balls being white:
8 7 28
P (−2 )=P ( W 1 ∩W 2 ) = × =
14 13 91
4. The probability of one ball is black and the other is orange:
4 2 2 4 8
P ( 2 )=P ( ( B1 ∩O2 ) ∪ ( O 1 ∩ B2 ) ) = × + × =
14 13 14 13 91
5. The probability of one ball is white and the other is orange:
8 2 2 8 16
P (−1 )=P ( ( W 1 ∩O2 ) ∪ ( O1 ∩ W 2 ) ) = × + × =
14 13 14 13 91
6. The probability of both balls are orange :
2 1 1
P ( 0 )=P ( O1 ∩O2 )= × =
14 13 91
Q13. A salesman has scheduled two appointments to sell vacuum cleaners. His first appointment will lead
to a sale with probability .3, and his second will lead independently to a sale with probability .6. Any sale
made is equally likely to be either for the deluxe model, which costs $1000, or the standard model, which
costs $500. Determine the probability mass function of X, the total dollar value of all sales.

Sale from Customer 1 Sale from Customer 2 X Probability

0 0 0 (1 – 0.3)(1 – 0.6) = 0.28
0 500 500 (1 – 0.3)(0.6)(0.5) = 0.21
0 1000 1000 (1 – 0.3)(0.6)(0.5) = 0.21
500 0 500 (0.3)(0.5)(1 – 0.6) = 0.06
500 500 1000 (0.3)(0.5)(0.6)(0.5) = 0.045
500 1000 1500 (0.3)(0.5)(0.6)(0.5) = 0.045
1000 0 1000 (0.3)(0.5)(1 – 0.6) = 0.06
1000 500 1500 (0.3)(0.5)(0.6)(0.5) = 0.045
 1000 1000 2000 (0.3)(0.5)(0.6)(0.5) = 0.045

P(X=0) = 0.28
P(X=500) = 0.21 + 0.6 = 0.27
P(X=1000) = 0.21 + 0.045 + 0.6 = 0.315
P(X=1500) = 0.045 +0.045 = 0.09
P(X=2000) = 0.045
Q17.

.
a. We find that
1 1 1
P ( X=1 )=P ( X ≤1 )−P ( X< 1 )= − =
2 4 4
P ( X=2 )=P ( X ≤2 ) −P ( X <2 )= − +
12 2(
11 1 2−1
4 )
=1/6

11 1
P ( X=3 )=P ( X ≤3 )−P ( X <3 ) =1− =
2 12
b. We find that

( )
3 1
−1
(
1 3
) (
3 1 1
P < X < = lim P X ≤ − −P X ≤ = +
2 2 n→ ∞ 2 n 2 2 ) ( )
1 2
4
2 1
− =
4 2

Q19. If the distribution function of X is given by

calculate the probability mass function of X.

Since F(b) = ∑ p ( x ) from the given expression for F(b) we see that
x ≤b

1
p ( 0 )=
2
3 1 1
p ( 1 )= − =
5 2 10
4 3 1
p ( 2 )= − =
5 5 5
9 4 1
p ( 3 )= − =
10 5 10
9 1
p ( 3.5 )=1− =
10 10
Q27. An insurance company writes a policy to the effect that an amount of money A must be paid if some
event E occurs within a year. If the company estimates that E will occur within a year with probability p,
what should it charge the customer in order that its expected profit will be 10 percent of A?
The company desires to make 0.1 A of profit. Assuming the cost charged to each customer is C, the
expected profit of the company then given by

C+ p (− A ) + ( 1− p ) ( 0 )=C− pA
This can be seen as the fixed cost received from the paying customers minus what is lost if a claim mus
be paid out. For this to be 0.1A we should have c – pA = 0.1A or solving for C we have
 (
C= p+
1
10)A

Q35. A box contains 5 red and 5 blue marbles. Two marbles are withdrawn randomly. If they are the same
color, then you win $1.10; if they are different colors, then you win -$1.00. (That is, you lose $1.00.)
Calculate
a. the expected value of the amount you win;
b. the variance of the amount you win.
Denote:
pr : the probability of drawing two red marbles

pr : the probability of drawing two blue marbles

prb: the probability of drawing one red marble and one blue marble

5 4 2
pr = × =
10 9 9
5 4 2
pb = × =
10 9 9

prb=2 × ( 105 × 59 )= 59
a. Expected value (E):
E=¿
b. The variance of the amount one wins can be computed by the standard expression for variance in
term of expectations. Specifically we have
Var ( W )=E [ W 2 ]−E [ W ]
2

Now using the results from part a above we see that

4 2 5 82
E [ W ] = ( 1.1 ) + (−1.0 ) =
2 2
9 9 75
So that

( )
2
82 1 49
Var ( W )= − =
75 15 45
Q39.
Q44. A communications channel transmits the digits 0 and 1. However, due to static, the digit transmitted
is incorrectly received with probability .2. Suppose that we want to transmit an important message
consisting of one binary digit. To reduce the chance of error, we transmit 00000 instead of 0 and 11111
instead of 1. If the receiver of the message uses “majority” decoding, what is the probability that the
message will be wrong when decoded? What independence assumptions are you making?
Q49. It is known that diskettes produced by a certain company will be defective with probability .01,
independently of one another. The company sells the diskettes in packages of size 10 and offers a money-
back guarantee that at most 1 of the 10 diskettes in the package will be defective. The guarantee is that the
customer can 𝑝ଶ 𝛼 285 of 848 return the entire package of diskettes if he or she finds more than 1
defective diskette in it. If someone buys 3 packages, what is the probability that he or she will return
exactly 1 of them?
Q50. When coin 1 is flipped, it lands on heads with probability .4; when coin 2 is flipped, it lands on
heads with probability .7. One of these coins is randomly chosen and flipped 10 times.
a. What is the probability that the coin lands on heads on exactly 7 of the 10 flips?
Q54. The expected number of typographical errors on a page of a certain magazine is .2. What is the
probability that the next page you read contains (a) 0 and (b) 2 or more typographical errors? Explain
your reasoning!
a. The probability of having 0 typographical errors on the next page:
−0.2
e ( 0.2 )0 −0.2
P ( X=0 )= =e
0!
b. The probability of having 2 or more typographical errors on the next page:
−0.2
e ( 0.2 )1
P ( X=1 )= =0.2 × e−0.2
1!
−0.2 −0.2
P ( X ≥2 )=1−e −0.2 ×e
Q55. The monthly worldwide average number of airplane crashes of commercial airlines is 3.5. What is
the probability that there will be
a. at least 2 such accidents in the next month;
b. at most 1 accident in the next month? Explain your reasoning!
Q57. State your assumptions. Suppose that the average number of cars abandoned weekly on a certain
highway is 2.2. Approximate the probability that there will be
a. no abandoned cars in the next week;
b. at least 2 abandoned cars in the next week.
a. To find the probability of no abandoned cars in the next week (P(X=0)):
−λ 0
e λ −λ −2.2
P ( X=0 )= =e =e
0!
b. To find the probability of at least 2 abandoned cars in the next week (P(X≥2)):

P ( X ≥2 )=1−P ( X =0 )−P ( X =1 )
 −λ 1
e λ −λ −2.2
P ( X=1 )= =e λ=e ×2.2
1!
−2.2 −2.2
P ( X ≥2 )=1−P ( X =0 )−P ( X =1 )=1−e −e ×2.2
Q60. Suppose that the number of accidents occurring on a highway each day is a Poisson random variable
with parameter λ=3.

a. Find the probability that 3 or more accidents occur today.

b. Repeat part (a) under the assumption that at least 1 accident occurs today.