For practice problems for decision theory, refer to the problem sets at the end of the handout sections.

1. Is anything wrong with the following argument? 20% of the Indians are senior citizens, 45% of the Indians are
women. So, the proportion of women senior citizens is 45% of 20% = 9%.

2. Two dice are thrown n times in succession. What is the probability of obtaining double six at least once?

3. If n accidents have taken place in Jamshedpur during the first N days of the year 2020, what is the probability
that on January 1st, exactly b accidents took place in Jamshedpur?

4. A locality has been divided in k regions containing n houses each, labeled from 1 to n. One house is randomly
selected from each region. What is the probability that m is the greatest label drawn?

5. In a psychology experiment, each subject is presented 3 ordinary cards, face down. The subject takes one of
those cards. The subject also takes one card at random from a separate, full, deck of 52 cards. If the two cards are
from the same suit (Heart/Diamond/Club/Spade), the subject wins a prize. What is the chance of winning?

6. If A and B are two events such that A and B are mutually exclusive, P(A) > 0, P(B) >0, then can A and B be
independent? Justify your answer.

7. If A, B and C are three events such that P(A|B) = P(A) and P(A|C) = P(A) where P(A) > 0, then are A, B and C
mutually independent of each other? Justify your answer.

8. Consider families with two children. If one child of a family is a boy, what is the probability that the other child
is a girl?

9. A startup sells coffee frothers through online as well as offline channels. In the last three months they have sold
to a customers online and b customers offline. Assume that all customers are distinct. If m + n customers are
chosen at random, find the probability that m of them are online customers and n of them are offline customers.

10. From a class of m boys and n girls, k (< m+n) students are randomly selected to volunteer for school sports.
We do not know their gender. Now one more student from the remaining students in the class is randomly
selected. Find the probability that it is a girl.

11. According to a research study, the incidence rate of HIV in India is 0.4% for a certain section of the
population. A Clinical test in India is 95% accurate in detecting HIV. i.e., if there is actually HIV, the test will be
correctly detect it 95% of the times. If there is no HIV, the test will again be correct in 95% of cases. A person
from this section of the population undergoes a test and the test says he has HIV.

a) What is the probability that he really has the disease?

b) A second independent test that has similar accuracy also comes out positive. Now, what is the probability that
he has disease? (Such an update of probability based on additional information is referred to as "Bayesian
Update")

12. Three dies are thrown. Work out the following probabilities assuming I) the dies are fair, II) the dies are biased
with P(1) = 0.25, P(2) = P(3) = P(4) = P(5) = P (6) = 0.15:
a) the sum of the numbers shown on the three dice is even
b) the product of the numbers shown on the three dice is divisible by 4
c) the sum of the numbers shown on the three dice is even, given that their product is divisible by 4

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13. In a factory, Machines A, B and C manufacture 25, 35 and 40 percent of total production respectively. Of their
output 5, 4 and 2 percent are defective respectively. A product is drawn at random from the produce and is found
to be defective. What is the probability that it was manufactured by Machine A?

14. A production process involves three machines A, B and C, which produce 50%, 30% and 20% respectively of
the total output. Out of the items produced by Machine A, 10% fail in a quality control test. The corresponding
figures for Machines B and C are 20% and 30% respectively. All items passing the quality control test are directly
acceptable. On the other hand, items failing in the quality control test are further processed and thus 40%, 50%
and 60% of them turn out to be marginally acceptable, depending on whether they came from Machines A, B and
C respectively. For example, out of the items that are produced by Machine A and that fail in the quality control
test, 40% eventually turn out to be marginally acceptable, and so on.
a) Find the unconditional probability that a randomly chosen item from the production process is found to be
directly acceptable.
b) Find the probability that a randomly chosen item from the production process turns out to be marginally
acceptable.
c) Given that a randomly chosen item from the production process has failed in the quality control test, what is the
conditional probability that it turns out to be marginally acceptable?
d) Given that a randomly chosen item from the production process has turned out to be marginally acceptable,
what is the conditional probability that it was produced by Machine A?
e) Given that a randomly chosen item was not produced by Machine B, what is the conditional probability that it
turns out to be marginally acceptable?

15. Scott Myers is a security analyst for a telecommunications firm called Webtalk. Although he is optimistic
about the firm’s future, he is concerned that its stock price will be hugely affected by the condition of credit flow
in the economy. He believes that the probability is 0.2 that credit flow will improve significantly, 0.5 that it will
improve only marginally and 0.3 that it would not improve at all. He also estimates that the probability that the
stock price of Webtalk will go up by at least 20% is 0.9 with significant improvement in credit flow, 0.4 with
marginal improvement in credit flow and 0.1 with no improvement in credit flow.
a) What is the unconditional probability that the stock price of Webtalk goes up by at least 20%?
b) Given that the stock price of Webtalk has not gone up by more than 20%, what is the probability that there was
no improvement in credit flow?

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16. Mektek, a new company, is thinking about developing a smartphone. However, before they start developing
the smartphone, they want to make sure that it will make sense to invest on this. They are planning to employ a
market survey farm to sense the market. The following are the considerations:
The market survey can predict 3 scenarios: high, medium or low demand. In a high demand situation, Mektek
makes a profit of Rs. 10,00,00,000 (10 Crores). In case of medium demand, they make a profit of Rs. 1,00,00,000
(1 Crore), and in case of a low demand, they lose Rs. 2,00,00,000 (2 Crores).

The probabilities with which the market survey will predict high, medium or low demand are 40%, 20% and 40%
respectively. The problem is that historically when such a survey had predicted high demands, 40% of the time it
were wrong, half of such cases in fact being that of low demand, and rest of medium demand. Similarly, when
such a survey predicted medium demand, it was correct only 70% of the times, with rest of the cases being split
equally between high and low demand. The survey, however, has worked well in case when a low demand
scenario was predicted; it was correct 90% of the times in such a case, the rest of the cases all being of medium
demand.
a) What is the probability that Mektek will make a profit given that the market survey has predicted a low demand
scenario?
b) What is the (unconditional) probability that Mektek will make a loss?
c) What is the probability that Mektek will make a loss given that the market survey has not predicted a low
demand scenario?
d) If MekTek is risk-neutral, what should they do in case the predicted demand is i) high, ii) medium or iii) low?
What would have their optimal strategy been if the survey was not done?

17. Suppose A, B and C are mutually independent events and that P(A) = 0.5, P(B) = 0.8 and P(C) = 0.9. Find the
probabilities that
a) All three events occur.
b) Exactly two of three events occur.
c) None of the events occurs.

18. Two six faced fair dice are thrown. Let Event A = Die 1 shows six, Event B = Die 2 shows six and Event C =
Both dice show the same face. Show that A, B, C are pairwise independent but not mutually independent.

19. Consider families with 3 children. Let B denote boy and G denote girl. Assume that all 8 possibilities for the
three children in order have equal probabilities. Define events A B and C as follows: A= at least 2 boys, B= 1st
child is a girl, C= 2nd child is a boy. Show that P(A ∩ B ∩ C) = P(A) × P(B) × P(C) but A, B, C are not pairwise
independent.

20. A machine has n components. It functions only if at least one component functions. All components function
independently and probability of any one component not functioning is p. What is the probability that all
components are functioning given that the machine is functioning?

21. A system has two components: A and B. The system functions as long as at least one component functions. If
both A and B are functional at the start of the day, then they fail independently during the day with probability of
failure for each component being 0.2. If exactly one of A and B is functional at the start of the day, then the
functional component fails during the day with probability 0. 4.

Answer the following questions assuming that both A and B were functional at the start of Monday.
a) What is the probability that the system is functional at the start of the day on Tuesday?

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b) What is the probability that the system is functional at the start of the day on Wednesday?
c) What is the probability that the system is functional at the start of the day on Thursday given that the system is
functional at the start of day on Tuesday?

22. Consider the following system where gas is supposed to flow from A to B:

There are three valves in the system: V1, V2 and V3, each of which may develop faults, and hence stop working,
independently with probability p. Gas will flow from A to B if either both valves in the pair (V1, V2) or the valve
V3 or all three valves are functional.
a) What is the probability that gas is flowing from A to B?
b) Given that gas is flowing from A to B, what is the probability that V1 has developed a fault?
c) Given that gas is not flowing from A to B, what is the probability that V1 has not developed a fault?

23. From an urn containing 3 white and 5 black balls, 4 balls are transferred into an empty urn. If it is known that
at least 2 transferred balls are white, what is the probability that a ball taken from the second urn will be white?

24. An urn has 3 black balls and 5 white balls. Each time I draw a ball. If it is black, I add 1 black ball and 2 white
balls. If it is white, I add 2 black balls and 1 white ball. Assume that the ball that is originally drawn is also
replaced along with the additional balls. What is the probability of getting a Black-White-Black-White in four
successive draws?

25. Simpson's paradox, or the Yule–Simpson effect, is a paradox in which a trend that appears in different
groups of data disappears when these groups are combined, and the reverse trend appears for the aggregate data.
Consider the following example:

Abracadabra University is well-known for its bias against women. Last year 3000 applicants applied to join the
undergraduate programme of the university, among them 2000 were men and 1000 women. 100 women were
shortlisted (10%), along with 300 men (15%). A clear case of sexual bias is apparent. In fact, that has been the
trend for years.

What, however, baffles the university authority is that they gave clear instruction to both of its two schools, Arts
and Science, to try to admit more women, and they did try to oblige. So what happened? Let’s examine the
admission offers last year:

Men Women
Arts 295 accepted/1900 applied 10 accepted/50 applied
Science 5 accepted/100 applied 90 accepted/950 applied

Compute and compare the proportion of men and women admitted to the Schools of Arts and Science: i.e.
compute
a) What is the probability that a random male applicant gets selected in the School of Arts?

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b) What is the probability that a random female applicant gets selected in the School of Arts?
c) What is the probability that a random applicant gets selected in the School of Arts?
d) What is the probability that a random male applicant gets selected in the School of Science?
e) What is the probability that a random female applicant gets selected in the School of Science?
f) What is the probability that a random applicant gets selected in the School of Science?
Based on a)-f) above, can you explain what is going on? Is the criticism towards the university justifiable? What is
your take on this analysis?

26. Consider a random variable X with the following distribution:

X -3 -1 0 1 2 3 5 8
P(X = x) 0.1 0.2 0.15 0.2 0.1 0.15 0.05 0.05

a) P(X > 0),

b) P(X is even),
c) P(1 ≤ X ≤ 8),
d) P(X = -3 | X ≤ 0),
e) P(X ≥ 3 | X > 0),
f) E[X],
g) V[X].

27. Suppose that a school has 20 classes: 16 with 25 students in each, three with 100 students in each and one with
300 students for a total of 1000 students.
a) What is the average class size?
b) Suppose a student is picked at random from the 1000 students. Let X= size of the class to which (s)he belongs.
What is the p.m.f of X?
c) What is E[X]?
d) Is it surprising that a) and c) are not equal? Can you define a random variable Y such that E[Y] will give the
answer in a)?

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28. A gambling guide recommends the following ``winning strategyʹʹ to make money in the game of roulette. It
recommends that a gambler bet Rs.100 on red. If red appears, then the gambler should take the money and quit. If
he loses, then he should bet Rs.100 on red for the next two spins and then quit. Note that P(red) = 9/19. Note that
if betting Rs.100 means that you pay the casino Rs.100 to play; if you win you get back your Rs.100 plus another
Rs.100, but if you lose then the casino keeps your payment. Let X be the gambler’s winnings when he quits. Find
P(X>0) and E(X) and comment on the strategy.

29. According to a study conducted on eating habits of an adult population in a country, it is found that 25% of
males and 20% of females never eat breakfast. Suppose a sample of 5 men and 5 women are chosen. Compute the
probability that
a) At least 2 of the 10 never eat breakfast.
b) The number of women who eat breakfast is at least as much as the number of men who eat breakfast.
c) What would have been the answer to (a) if both the percentage of men and women who did not eat breakfast
were equal to 20%?

30. Probability of hitting a target is 0.2 and 10 shots are fired independently.
a) What is the probability of never hitting the target in the ten attempts?
b) What is the probability of hitting the target in the 7th attempt for the first time? What about the second time?
c) What is the probability of hitting the target at least twice in 10 attempts?
d) What is the probability that the target was hit at least twice in 10 attempts, given that it had been hit at least
once in 10 attempts?
e) Five more shots are fired, independently among themselves and independent of the previous shots. What is the
probability of at least two hits to the target in these 15 shots if i) the probability of hitting remains 0.2 for these
five shots, and ii) the probability of hitting the target in the last 5 shots is revised to 0.5 for the last five shots?

31. An airline always overbooks if there is demand. A particular plane has 180 seats and each ticket cost Rs. 4000.
The airline has sold 190 such tickets.
a) If the probability of an individual not showing up is 0.05, assuming independence, what is the probability that
the airline can accommodate all who show up? (Hint: Define r.v X = number of people who show up out of 190.
Express the probability in terms of X and compute.)
b) If the airline must return the ticket price, plus pay a penalty of Rs. 5000 to all who show up but cannot be
accommodated, what is the expected total penalty that the airline will have to pay? (Hint: Create a new r.v. Y=
penalty paid by airline. Express Y in terms of X. Since we know the distribution of X, find the distribution of Y.
i.e. identify the possible values of Y and the corresponding probabilities.)

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32. In a certain shop floor, a certain machine has 1% rate of producing defective items. The items are packed in
lots of 50. A customer will not accept a lot if it contains 3 or more defectives.
a) If it is known that a lot is not defective free, find the probability that it will be rejected by the customer.
b) Find the probability that out of 10 lots, exactly 2 are rejected by the customer.

33. A graduating student keeps applying for a job until she gets an offer. Assume that she applies for one job at a
given time, waits for the result and then applies for the next job. The probability of getting a job offer on an
application is p.
a) If p = 0.25, what is the expected value and variance of the number of applications?
b) Let p = 0.25. Suppose she only has time to apply for at most four jobs. What is the probability that she will get
at least one job offer?
c) Suppose she only has time to apply for at most four jobs. What would be the minimum value of p that would
ensure at least a 95% chance of getting at least one job offer?

34. The number of breakdowns of a computer system in a month is believed to follow a Poisson distribution. It has
been consistently observed in the past that the average number of monthly break downs is 1. Find the probability
that this computer will work for 3 months (a) without any break down (b) with exactly one break down.

35. Colour blindness occurs in 1% of a population. How large a random sample (with replacement) should one
draw from the population if the probability of it containing at least 1 colour blind person is 95% or more? Use
both the binomial and Poisson distributions to derive the required sample sizes.

36. A purchaser of electrical components buys them in lots of size 10. It is his policy to inspect three components
randomly chosen from the lot and to accept the lot only if all three are non-defective. If 30% of the lots have four
defective components and 70% have only one, what proportion of lots will the purchaser reject?

37. A random sample of size 3 is drawn without replacement from a lot of size 10, which contains 4 defective
items. What is the probability that at least 1 of the 3 items drawn are defective?

38. You are interested in estimating the proportion of missing books in a library. You take the catalogue and
design two sampling plans:
i. Draw a random sample of size 10 of names with replacement from the catalogue. Then look them up in the
library to see how many of them are missing.
ii. Keep drawing a random item sequentially, with replacement, from the catalogue and check whether the item is
missing or not. Once you encounter two missing books, you stop the sampling. If the true proportion of missing
books = 0.1,
a) What are the expected number of books you will check in the two schemes?
b) What is the probability that you encounter no missing item in the first sampling scheme?
c) What is the probability that you will sample more than 10 items in the second sampling scheme?
39. Suppose a 6 faced die has 2 faces numbered 1, 3 faces numbered 2 and 1 face numbered 3. Suppose the die is
thrown independently 10 times and in each throw each face has an equal chance of showing up.
a) What is the joint distribution of (X1, X2, X3) where Xi = number of times face i shows up?
b) What is the distribution of (X1 + X2)?

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40. X and Y are random variables with the joint distribution as given in the table below:
X Values
Y values↓ -1 0 2 6
-2 1/9 1/27 1/27 1/9
1 2/9 0 1/9 1/9
3 0 0 1/9 4/27

a) Obtain the marginal distributions of X and Y.

b) Are X and Y independent?
c) Compute P(Y is even).
d) Compute P(XY is odd).
e) Compute E(X) and V(X).
f) Compute E(Y) and V(Y).
g) Compute Cov(X,Y) and Cor(X,Y).
h) Compute E(X|Y = j) for j = -2, 1, 3.
i) Let g(Y) = E(X|Y). Verify that E(E(X|Y)) = E(X).

41. Let X~Poisson(λ1) and Y~Poisson(λ2) be independent. Obtain the conditional distribution of X|X+Y=n.

42. The number of customers arriving at a bank has a Poisson distribution with rate 10 per hour. Each customer
arrives independently of each other, and is either male with probability 0.6 or female with probability 0.4. Let X =
number of male customers arriving in an hour and Y = number of female customers arriving at the same hour.
a) What is the joint distribution of (X,Y)?
b) Are X and Y independent?
c) What are the marginal distributions of X and Y?

43. A middle level executive of a multinational company in Mumbai receives several telephone calls on his cell
phone. According to him the calls arrive independently and are governed by a Poisson distribution with an average
of 8 calls per day. The calls originate either from known acquaintances or from complete strangers in the ratio of
3:1 respectively. Answer the following questions.
a) What is the probability that the number of calls in a day is exactly 5?
b) What is the expected number of calls from strangers on any given day?
c) Given that there were 5 calls on a day, what is the chance that 4 of them were from strangers?
d)What is the probability that on a given day, he receives 2 calls from strangers and 3 calls from acquaintances?
e) What is the probability that on a given day all calls he receives are from strangers?

44. If X has p.d.f. f (x) = 4x3, 0 < x < 1 then

a) Find the c.d.f. of X.
b) Compute the median of X.
c) Find the c.d.f. of Y = X2.
d) Find the p.d.f. of Y.
e) Compute the 90th percentile of Y.

45. Trains headed to a destination A arrive at station at 15-minute intervals starting at 7:10 A.M., whereas trains
headed to destination B arrive at 15-minute intervals starting at 7 A.M. If a certain passenger arrives at the station
at a time that is uniformly distributed between 7 and 8 A.M, and then gets on the first train that arrives what is the
probability that the passenger travels to A?

8
46. You arrive at a bus stop at 10 A.M, knowing that the waiting time for the buses have an exponential
distribution with a mean of 30 minutes.
a) What is the probability that you will wait more than 10 minutes?
b) If at 10:15 am the bus has still not arrived, what is the probability that you will wait for at least 10 more
minutes?
c) What is the probability of exactly two buses arriving during 10am-11am?

47. An average CFL is supposed to last for 1 year. Assume the lifetime is distributed exponentially. Find the
probability that
a) A CFL bulb last for 2 years or more.
b) Among the 5 CFL bulbs I have in my house, at least 4 last for 2 years or more.
c) On average, the 5 CFL bulbs in my house last for 2 years or more.

48. The annual net margins of a hundred year old company are known to be approximately normally distributed. It
has been observed that in 20 of the 100 years the net margins have fallen below 0 and in 10 of the 100 years the
margins have exceeded 5 crores. What can we say about the expected value and the standard deviation of net
margins?

49. A manufacturer makes shafts for electric motors. The external diameter is normally distributed with mean 1
inch and SD 0.001 inch. The manufacturer purchases bushings which the shaft passes through. The internal
diameter of the hole in the bushing is normally distributed with mean 1.002 inch and sd 0.001 inch. When the
shaft is put in the bushing the clearance is defined as the diameter of the hole in the bushing minus the diameter of
the shaft. Negative clearance means the shaft does not fit.
a) For a shaft and bushing selected at random, what is the probability that the shaft does not fit?
b) To operate properly the clearance should be between 0.0016 and 0.0048 inch. What fraction of the assembled
units will be in this range?

50. A food processor packages instant coffee in small jars. The weights of the jars are normally distributed with a
standard deviation of 3 grams. If 5% of the jars weigh more than 124.92 grams, then what is the mean weight of
the jars?

51. A project has four phases viz. 1,2,3,4. A phase cannot start until the previous phase is completed. The time to
completion for each phase is believed to be normally distributed with means 6, 12, 4 and 8 weeks respectively and
standard deviations 1,3,1 and 2 weeks respectively. Completion times of the different stages are independent of
each other.
a) What is the expected total time and SD of total time for completion of the project?
b) What is the probability that phase 3 can be started no later than 20 weeks from start?
c) If the project is scheduled to be completed in 32 weeks, what is the probability that it will be completed in time?
d) What should be the planned duration if a probability of 80% is specified for in time completion of the project?

52. There are three lunch specials in a restaurant: A, B and C, which cost Rs.100, Rs. 140 and Rs. 150
respectively. A student, who lunches in that restaurant every day, chooses these three specials with probabilities
60%, 20% and 20% respectively. He chooses one lunch special every day independently of his previous decisions.
a) Obtain the distribution of the student’s daily expenditure on lunch.
b) Obtain the distribution of the student’s average expenditure on lunch over two days.
c) Obtain the distribution of the student’s average expenditure on lunch over 50 days.

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53. You manage a sales organisation consisting of 100 people. Each sales person is capable of selling on an
average 4 items per month. Based on your experience you have observed that the standard deviation of sales made
is 1.
a) What is the expected sales made by the organization in a month?
b) What is the probability that the total sales in the month exceeds 410 items? (State your assumptions clearly.)

54. A volunteer tourist guide at a heritage site in India does not charge a fee for her services. However, she accepts
tips provided by the tourists. For every tourist she guides she receives either a tip of 0 or 100 or 200 rupees with
equal probabilities (i.e., = 1/3). Assume that this is her only source of income. For questions a,b,c, assume that in a
year she guides 5000 tourists.
a) What is her expected annual income?
b) What is the standard deviation of the annual income?
c) What is the probability that her income during the year will exceed Rs. 6,00,000?
d) Suppose that she wants to target an annual income of at least 600,000 in the sense that the probability of her
income falling below 600,000 should be less than 5%, then at least how many tourists should she target to guide
during the year?

55. According to a job website, every month around 20,000 people register in their website, and about 60% of
them get placed within two weeks. If each person gets placed independently with probability 0.6 within two
weeks, what is the probability that at least 13,000 people get placed within two weeks? What about 15,000?

56. A production process has a long-term defective item production rate of 5%. The produced items are sent to a
retailer in lots of size 100, who inspects 10 items selected from the lot at random, and rejects the lot if he finds two
or more defectives among the inspected items.

a) What is the probability that a random lot contains more than 10 defective items?
b) What is the probability that a randomly chosen lot is rejected during inspection?
c) What is the probability that among 100 randomly chosen lots, at least 5 are rejected?
d) Given a lot is rejected, what is the expected number of defective items in the lot?
e) Given a lot is accepted, what is the expected number of defective items in the lot?

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