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If a student is Average, in the next time step the student will be Rich with probability 0.05
If a student is Average, in the next time step the student will be Average with probability 0.2
If a student is Average, in the next time step the student will be In Debt with probability 0.45
If a student is Poor, in the next time step the student will be Average with probability 0.4
If a student is Poor, in the next time step the student will be Poor with probability 0.3
If a student is Poor, in the next time step the student will be In Debt with probability 0.2
If a student is In Debt, in the next time step the student will be Average with probability 0.15
If a student is In Debt, in the next time step the student will be Poor with probability 0.3
If a student is In Debt, in the next time step the student will be In Debt with probability 0.55
(a) Draw the corresponding Markov chain and obtain the corresponding stochastic matrix.
(b) If a student starts at the “Average” state, what will be the probability of them getting ot
state “Rich” after
i) 1 time step?
ii) 2 time steps?
iii) 3 time steps?
2. Let Sn be a Markov Chain with state space S = {1, 2, 3} and transition matrix
0.1 0.4 0.5
P = 0.3
0.5 0.2
0.4 0.3 0.3
a. Suppose that the system is in state 0 , so there are no customers in the system and the
next transition will be to state 1 . Let T0 be the time until the next 0 transition. Show
that T0 ∼ Exponential(λ) .
b. Suppose that the system is currently in state i , where i > 0 until the next transition.
Show that Ti ∼ Exponential(λ + µ)
c. Suppose that the system is at state i . Find the probability that the next transition will
be to state i + 1 .
d. Draw the jump chain, and provide the holding time parameters λi .
e. Find the Generator matrix.
f. Draw the transition rate diagram.