Chapter 4: Introduction to Probability Exercises: Applications

Book Title: Statistics for Business and Economics

Printed By: Josué García Mendoza (josue.garcia49@anahuac.mx)
© 2018 Cengage Learning, Cengage Learning

Exercises: Applications

32. The automobile industry sold 657,000 vehicles in the United States during
January 2009 (The Wall Street Journal, February 4, 2009). This volume was
down 37% from January 2008 as economic conditions continued to decline.
The Big Three U.S. automakers—General Motors, Ford, and Chrysler—sold
280,500 vehicles, down 48% from January 2008. A summary of sales by
automobile manufacturer and type of vehicle sold is shown in the following
table. Data are in thousands of vehicles. The non-U.S. manufacturers are led
by Toyota, Honda, and Nissan. The category Light Truck includes pickup,
minivan, SUV, and crossover models.

Type of Vehicle

Car Light Truck

U.S. 87.4 193.1

Manufacturer
Non- 228.5 148.0
U.S.

a. Develop a joint probability table for these data and use the table to
answer the remaining questions.

b. What are the marginal probabilities? What do they tell you about the
probabilities associated with the manufacturer and the type of vehicle
sold?

c. If a vehicle was manufactured by one of the U.S. automakers, what is

the probability that the vehicle was a car? What is the probability it was
a light truck?

d. If a vehicle was not manufactured by one of the U.S. automakers, what

is the probability that the vehicle was a car? What is the probability it
 was a light truck?

e. If the vehicle was a light truck, what is the probability that it was
manufactured by one of the U.S. automakers?

f. What does the probability information tell you about sales?

33. Students taking the Graduate Management Admissions

Image shows a
Test (GMAT) were asked about their undergraduate
Self-test icon.
major and intent to pursue their MBA as a full-time or
part-time student. A summary of their responses follows.

Undergraduate Major

Business Engineering Other Totals

Intended Full- 352 197 251 800

Enrollment Time
Status
Part- 150 161 194 505
Time

Totals 502 358 445 1305

a. Develop a joint probability table for these data.

b. Use the marginal probabilities of undergraduate major (business,

engineering, or other) to comment on which undergraduate major
produces the most potential MBA students.

c. If a student intends to attend classes full-time in pursuit of an MBA

degree, what is the probability that the student was an undergraduate
engineering major?

d. If a student was an undergraduate business major, what is the

probability that the student intends to attend classes full-time in pursuit
of an MBA degree?

e. Let A denote the event that the student intends to attend classes full-
time in pursuit of an MBA degree, and let B denote the event that the
student was an undergraduate business major. Are events A and B
independent? Justify your answer.
34. The Bureau of Transportation Statistics reports on-time performance for
airlines at major U.S. airports. JetBlue, United, and US Airways share terminal
C at Boston’s Logan Airport. The percentage of on-time flights reported for
August 2012 was 76.8% for JetBlue, 71.5% for United, and 82.2% for US
Airways (Bureau of Transportation Statistics website, October 2012). Assume
that 30% of the flights arriving at terminal C are JetBlue flights, 32% are
United flights, and 38% are US Airways flights.

a. Develop a joint probability table with three rows (the airlines) and two
columns (on-time and late).

b. An announcement is made that Flight 1382 will be arriving at gate 20 of

terminal C. What is the probability that Flight 1382 will arrive on time?

c. What is the most likely airline for Flight 1382? What is the probability
that Flight 1382 is by this airline?

d. Suppose that an announcement is made saying that Flight 1382 will

now be arriving late. What is the most likely airline for this flight? What is
the probability that Flight 1382 is by this airline?

35. To better understand how husbands and wives feel about their finances,
Money Magazine conducted a national poll of 1010 married adults age 25 and
older with household incomes of $50,000 or more (Money Magazine website,
December 14, 2014). Consider the following example set of responses to the
question, “Who is better at getting deals?”

Who Is Better?

My We Are
Respondent I Am Spouse Equal

Husband 278 127 102

Wife 290 111 102

a. Develop a joint probability table and use it to answer the following

questions.

b. Construct the marginal probabilities for Who Is Better (I Am, My Spouse,

We Are Equal). Comment.
 c. Given that the respondent is a husband, what is the probability that he
feels he is better at getting deals than his wife?

d. Given that the respondent is a wife, what is the probability that she feels
she is better at getting deals than her husband?

e. Given a response “My spouse” is better at getting deals, what is the

probability that the response came from a husband?

f. Given a response “We are equal,” what is the probability that the
response came from a husband? What is the probability that the
response came from a wife?

36. Jamal Crawford of the National Basketball Association’s Portland Trail Blazers
is the best free-throw shooter on the team, making 93% of his shots (ESPN
website, April 5, 2012). Assume that late in a basketball game, Jamal
Crawford is fouled and is awarded two shots.

a. What is the probability that he will make both shots?

b. What is the probability that he will make at least one shot?

c. What is the probability that he will miss both shots?

d. Late in a basketball game, a team often intentionally fouls an opposing

player in order to stop the game clock. The usual strategy is to
intentionally foul the other team’s worst free-throw shooter. Assume that
the Portland Trail Blazers’ center makes 58% of his free-throw shots.
Calculate the probabilities for the center as shown in parts (a), (b), and
(c), and show that intentionally fouling the Portland Trail Blazers’ center
is a better strategy than intentionally fouling Jamal Crawford. Assume as
in parts (a), (b), and (c) that two shots will be awarded.

37. A joint survey by Parade magazine and Yahoo! found that 59% of American
workers say that if they could do it all over again, they would choose a
different career (USA Today, September 24, 2012). The survey also found that
33% of American workers say they plan to retire early and 67% say they plan
to wait and retire at age 65 or older. Assume that the following joint probability
table applies.
 Retire Early

Yes No

Same .20 .21 .41

Career
Different .13 .46 .59

.33 .67

a. What is the probability a worker would select the same career?

b. What is the probability a worker who would select the same career
plans to retire early?

c. What is the probability a worker who would select a different career

plans to retire early?

d. What do the conditional probabilities in parts (b) and (c) suggest about
the reasons workers say they would select the same career?

38. The Institute for Higher Education Policy, a Washington, D.C.-based research
firm, studied the payback of student loans for 1.8 million college students who
had student loans that began to become due six years ago (The Wall Street
Journal, November 27, 2012). The study found that 50% of the student loans
were being paid back in a satisfactory fashion, whereas 50% of the student
loans were delinquent. The following joint probability table shows the
probabilities of the student loan status and whether or not the student had
received a college degree.

College Degree

Yes No

Loan Satisfactory .26 .24 .50

Status

Delinquent .16 .34 .50

 College Degree

Yes No

.42 .58

a. What is the probability that a student with a student loan had received a
college degree?

b. What is the probability that a student with a student loan had not
received a college degree?

c. Given the student had received a college degree, what is the probability
that the student has a delinquent loan?

d. Given the student had not received a college degree, what is the
probability that the student has a delinquent loan?

e. What is the impact of dropping out of college without a degree for

students who have a student loan?

Chapter 4: Introduction to Probability Exercises: Applications

Book Title: Statistics for Business and Economics
Printed By: Josué García Mendoza (josue.garcia49@anahuac.mx)
© 2018 Cengage Learning, Cengage Learning

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