Suppose the entire cola industry produces only two colas viz., Pepsi and Coke.

Given that a person last purchased Pepsi, there is 90% that his next purchase will be Pepsi. Given that a person last purchased Coke, there is an 80% that the next purchase will be Coke.

i.

If a person is currently a Coke purchaser, what is the probability that two purchases from now he will purchase Pepsi ?

ii.

If a person is currently a Pepsi purchaser, what is the probability that from three purchases from now he will purchase Pepsi ?

According to a weather forecaster's subjective probability assessments (nobody believes them!), the probability of record-breaking rain during this year in Jamshedpur is 0.01 (thank God!). However, if Ranchi has a record-breaking rain, the probability is 0.5 that Jamshedpur will have a record-breaking rain. If Ranchi and Rourkela both have recordbreaking rain, the probability that Jamshedpur will have record-breaking rain is 0.8. The probability that Ranchi will experience record-breaking rain if Rourkela experiences record-breaking rain is 0.6. The probability that Rourkela will experience recordbreaking rain is 0.02. (What the hell is the question, Sir?). What is the probability that all three places will have record-breaking rain during this year? (15) A psychologist developed a test designed to help predict whether production-line workers in a large industry will perform satisfactorily. A test was administered to all new employees in a corporation. At the end of the first year of work, these employees were rated by their supervisors: 18% were rated excellent, 53% were rated satisfactory and 29% were rated poor. 48% percent of those rated excellent passed the psychologists test, as did 22% of those rated satisfactory and 12% of those rated poor.

a) What is the probability that a randomly selected employee will pass the psychologists test?

b) What is the probability that an employee who doesnt pass the test will be rated excellent or satisfactory?

A Professor finds that he awards a final grade of A + in QT to 20% of the students.(Certainly can't be me!). Of those who obtain a final grade of A+, 70% obtained an A+ in the mid-term examination. (Can't be you!!). Also, 10% of the students who failed to obtain a final grade of A+ earned an A+ in the mid-term examination. What is the probability that a student with an A+ in the mid term examination will obtain a final grade of A+ ?

The owner of TMH (Thumhari Marzi se Maro) Hospital wants to open a new facility in a certain area. He usually builds 25-, 50-, or 100-bed facilities, depending on whether anticipated demand is low, medium or high. On the basis of his past experience, the probabilities of low demand, Medium demand and high demand are estimated as 0.1, 0.4and 0.5 and the short-range payoffs in Rs are calculated as follows.

Demand Build 25 bed

Acts Build 50 bed

Build 100 bed

Low Medium High

30,000 35,000 40,000

-20,000 50,000 55,000

-40,000 -10,000 75,000

1) What would be the best decision? 2) What is the value of Expected Value of Perfect Information?

The table given below shows the probabilities of investors categorised according to the annual rate of return expected and the level of risk acceptable.

Let X be the random variable denoting the expected annual rate of return (ARR) and Y be the random variable denoting the acceptable level of risk(LOR).

X =

if the ARR < 10% 1 2 if the ARR is between 10%-15% if the ARR >15%

let Y

if the LOR is high 1 2 3 if the LOR is Medium if the LOR is low if the LOR is is none

Y \ X 0 1 2 3 Total

0 1/12 1/4 1/8 1/120

1 1/6 1/4 1/20 0

2 1/24 1/40 0 0

Total

Find i. ii. iii. iv. P( X=1 , Y=2) P(X+Y <= 1) P(X > Y) COV(X,Y)