The following problems in your Work Book

1. An MBA applies for one job in two firms X and Y. The probability of his being selected
in firm X is 0.7 and his being rejected in firm Y is 0.5. The probability of at least one of
his applications being rejected is 0.6. What is probability that he will be selected in one
or both of the firms?
2. A hotel gets cars for its guests from three rental agencies: 20% from agency X, 40% from
agency Y and 40% from agency Z. If 14% of cars from agency X, 4% cars from agency
Y and 8% of cars from agency Z need car repairing, what is probability that car needing
service is delivered to one of the hotel’s guests?
3. The prior probabilities for events A1 and A2 are P(A1) and P(A2) = 0.60. It is also known
that P(A1∩A2) = 0. Suppose P(B | A1) = 0.20 and P( B | A2) = 0.05,
a. Are A1 and A2 mutually exclusive,
b. Compute P(A1∩ B) and P(A2 ∩ B)
c. Compute P(B),
d. Apply Bayes’ theorem to compute P(A1 | B) and P(A2 |B)
4. An economist believes that during the period of high economic growth the US Dollar
appreciates with probability 0.70, in moderate growth it appreciates with probability 0.40,
and during low growth it appreciates with probability 0.20. It is known the probability of
high growth, moderate growth and low growth are respectively 0.30, 0.50 and 0.20.
Suppose the dollar has been appreciating during present period, What is the probability
that economy has been experiencing a period of high growth?
5. If a machine is correctly set up, it produces 90% acceptable items. If it is incorrectly set
up it produces 40% acceptable items. Experience shows that 80% of the set ups are
correctly done.
a. If after a certain set up, out of the first two items, first is found to be acceptable
and second unacceptable, what is the probability that machine is correctly set up?
b. if the machine produced first two items as acceptable, what is the probability that
the machine is correctly set up?
6. A certain make of automobile tyres has a flat due to external causes, on an average, every
2000 KMs. Assuming that occurrences follow Poisson law, what is the probability that
a. More than one flat will occur in a 500 km run? (0.0265)
b. No flat will occur in a trip of 5000 km? ( 0.0821)
7. A toy manufacturer assembles an electronic toy using five components. The components
are produced independently and each one has a probability of 0.01 of being defective.
What is the probability of toy being defective?
Examine the table given below and answer questions from 5 to 10
Result→ Average Medium quality Superior Quality Total
Group↓ quality E2 E3
E1
Machine 1 (A) 40 60 50 150
Machine 2 (B) 30 20 40 90
Machine 3 (C) 70 80 110 260
Total 140 160 200 500
 a. P ( E1) is equal to A) 40/500 B) 140/500 C) 40/150 D) 0.336/500 E) NONE
b. P (B) is equal to A) 20/160 B) 90/500 C) 2.97/90 D) 30/90 E) NONE
c. P(E3|C) A) 110/500 B) 110/260 C) 200/260 D) 200/500 E) NONE
d. P( A|E2) A) 150/160 B) 60/160 C) 160/500 D) 150/500 E) NONE
e. P(C|E1) A) 140/70 B) 70/140 D) 140/500 D) 140/260 E) NONE
f. P( A∪ B) A) 13500/25000 B) 240/500 C) 90/500 D) 150/500 E) NONE
8. A security analyst feels that the chances are 50% that the price of the shares of a
company would increase next week and 20% that price of the share of a company B
would rise. The two prices are expected to move independently of each other without any
relation with index. Find the probability that in the next week

a. Both prices will rise

b. Only one company’s share price will increase

c. Neither of the prices would increase

9. A raw material is supplied to a factory by two vendors – A & B. Only 40% of the material
received comes from vendor A while the remaining comes from the vendor B. 80% of the lots
supplied by A are of exceptional quality while only 50% of the lots supplied by B are of
exceptional quality. An incoming shipment of material is inspected and is found to be of
exceptional quality. Find, using Baye’s theorem, the probabilities that it came from (i) A or (ii) B.
10. A husband and a wife appear in an interview for two vacancies for the same post. The
probability of husband’s selection is 1/7 and wife’s selection is 1/5. A) What is the
probability that both of them will be selected? B) What is the probability that only one of
the is selected?