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# BES Tutorial Sample Solutions, S1/10

## Please do not distribute this document to students.

It will be gradually posted on BES website with one week delay & without the
tutor notes denoted by TN.
WEEK 5 TUTORIAL EXERCISES (To be discussed in the week starting
August 16
1. The manager of a factory has determined from past experience that X, the
number of repairs required to machines in her factory on any one day, has
the following probability distribution:
x
P(X = x)

0.41

0.25

0.18

0.10

0.06

(a)

(b)

P(0 X 3)

(c)

0.41

0.25

0.18

0.1

0.06

(d)

1.15

0.41
3 1.15

1.15
0.25
0.10
4 1.15

1.15
0.18
0.06 1.5075

1.15

x
P(X = x|x>0)

0.42

0.31

0.17

0.10

## 2. Suppose that the daily number of errors a randomly-selected teller makes is

denoted by X and follows the distribution given in the table below. A
human resource manager records the daily numbers of errors of two
randomly selected tellers. Denote the associated random variables by X1
and X2. As the selection is random, X1 and X2 are independent and follow
the same distribution as X. The manager then computes the sample mean
where the sample size is n = 2.
x

P(X = x)

0.6

0.2

0.2

(a) Find the mean and variance of X1 and explain why we do not need to
find the mean and variance of X2 once we know those of X1?
0.6;

0.64

The mean and variance of X2 are the same because they have identical
distributions.
(b) As X1 and X2 are random so is . Find the mean and variance of
Compare these with the result from (a) and comment.
0.6

1
4

1
4

0.32

4, ?

## may take. What would happen if n =3,

Ifn=2possiblevaluesforthemeanare0,,1,3/2,2.
Ifn=3possiblevaluesare0,1/3,2/3,1,,2
Asnincreasesgetafinergridofvaluesbetweenextremesof0and2.
(d) Find the distribution of
(known as the sampling distribution).
Comment on the magnitudes of the probabilities.
Weknowpossiblevaluesforthemeanare0,,1,3/2,2.Nowneedtoassign
probabilities to each outcome to produce the probability distribution for the
samplemean.

Forexample
0
0,
0
0.6 0.6 0.36

Thefollowingtablelistsallpossibleoutcomesandassociatedprobabilities:
,
0,0
0,1
0,2
1,0
1,1
1,2
2,0
2,1
2,2

1
3/2
1
3/2
2

Therequiredprobabilitydistributionbecomes:

0
1/2
1
0.36
0.24
0.28
)

Probability
0.36
0.12
0.12
0.12
0.04
0.04
0.12
0.04
0.04

3/2
0.08

2
0.04

3. A student has taken three courses in this semester. Lets call them courses
A, B and C. Her chances of passing each course are 0.8, 0.65, and 0.5,
respectively. Passing each course is assumed to be independent of passing
(a) Define a random variable for each course outcome.
A=0(failA)&A=1(passA)
B=0(failB)&B=1(passB)
C=0(failC)&C=1(passC)
(b) What is the probability that this student passes exactly two courses?
P(passingtwocourses)=P(passA&BbutfailC)+P(passA&CbutfailB)+
1 0.5
0.8 0.5
1 0.65
P(passC&BbutfailA)=0.8 0.65
0.65 0.5
1 0.8
0.465
(c) What is the probability that this student fails at least one course?
P(failingatleastonecourse)=1P(passingallcourses)
1 0.8 0.65 0.5 0.74
(d) How reasonable is the assumption of independence?
Independenceislikelytobeanunreasonableassumption.Resultsarelikelytobe
dependent(strongpositiveassociation).

## 4. Let X be the number of heads in 4 tosses of a fair coin. What is the

probability distribution of X? What is the mean and variance of X? Consider
a game where you win \$5 for every head but lose \$3 for every tail that
appears in 4 tosses of a fair coin. Let the variable Y denote the winnings
from this game. What is the expected value of Y? Would you like to play
this game? If so why? If not why not?
Obviouslyx=0,1,2,3,4.Nowneedallpossiblecombinationsthatwillproduce
eachoftheseoutcomes.

n
Cxpossiblecombinationsovern=4tosses
ValueofX
0
(TTTT)[4C0=1]
1
(HTTT)(THTT)(TTHT)(TTTH)[4C1=4]
2
(HHTT)(HTHT)(HTTH)(THHT)(THTH)(TTHH)[4C2=6]
3
(THHH)(HTHH)(HHTH)(HHHT)[4C3=4]
4
(HHHH)[4C4=1]

Eachofthesecombinationsareequallylikelybecauseonanytossofafaircoin
P(H)=P(T)=0.5&wereassumingoutcomesareindependent

P(TTTT)=P(HTTT)=.=P(HHHH)=(0.5)4=0.0625

Therequiredprobabilitydistributionbecomes:

0
1
2
3
4

0.0625
0.25
0.375
0.25
0.0625

Y=5X3*(4X)
As
E(X)
= 0+10.25+20.375+30.25+40.0625

= 2
Var(X) = (2)20.0625+(1)20.25+0+(1)20.25+(2)20.0625

= 1

E(Y)
= 5E(X)3[4E(X)]

= 1012+6=4

or

y
P(Y=y)

12
0.0625

4
0.25

4
0.375

12
0.25

20
0.0625

E(Y) = 120.062540.25+40.375+12.025+200.0625

= 4

If you play the game enough times you would expect to win \$4 per game on
average.Thusthisisnotafairgame(whereexpectedreturnsarezero)butitis
biasedtowardstheplayerunlikegamesincasinoswhereexpectedwinningsare
negative.

Notice on any one play of the game you still might lose money and hence
someone who is extremely risk averse might not want to play the game even
thoughonaverageovermanyplaysofthegametheyshouldwin.