ALL NATIONS UNIVERSITY COLLEGE

DEPARTMENT OF HUMANITIES AND SOCIAL SCIENCES

MID-SEMESTER EXAMINATION, MARCH, 2012
PROBABILITY AND RANDOM PROCESS

1. a. Define the following with an example;

i. Mutually exclusive events
ii. Conditional probability
b. Suppose that the percentage of people who intend to vote for a certain candidate
follows an income based pattern as shown below:

Low

Income Level
Mid-range

High

80%

45%

40%

Assume that 20% of the population belongs to the low income level, 60% belong
to the mid-range income level, and 20% belong to the high income level.
Suppose a voter is selected at random.
i.

Present the above information on a probability tree diagram.

ii. What is the probability that the voter intends to vote for this candidate, given
that the voter belongs to the high income level?
iii. What is the probability that the voter intends to vote for this candidate?
iv. What is the probability that the voter belongs to the high income level, given
that the voter intends to vote for this candidate?
2. a. Define a random experiment, giving one example
b.

Let f(x) = 14 x2, x = 1, 2, 3.

i.

Show that f is a probability mass function of a discrete random variable X.

ii. Find MX (t), the moment generating function of X.

iii. Use the moment generating function of X to find E(X) and V(X).
c. If X~N (5, 16), find the value of k such that P (k < X < 9) = 0.2

3. a. Define the following:

i. Test Statistic
ii. P-value
iii. Critical value
b. The market share of a company depends on several components such as the intensity
of their own advertising campaign and the level of advertising its competitor does. A
large company is believed to have a market share of 64%. The CEO of the company
wants to test whether or not this value is still valid since its competitor has recently
launched a new advertising campaign. A random sample of 400 consumers reveals
that 244 of them use the company's product.
i.

State the appropriate null and alternative hypotheses to test if the companys market
share is equal to 64% or if it has dropped below 64%.

ii. Calculate the value of the appropriate test statistic.

iii. What is the corresponding p-value
iv. Using a 10% significance level, what is your decision
v. What type of mistake are we likely to commit?