CHAPTER 1: PROBABILITY

TREE DIAGRAM AND BAYES THEOREM

Draw tree diagram to compute all the joint probabilities for Question 1-3

1)

P(A) = 0.9 P(AC) = 0.1

P(B|A) = 0.4 P(B|AC) = 0.7

2)

P(A) = 0.8 P(AC) = 0.2

P(B|A) = 0.4 P(B|AC) = 0.7

3)

P(A) = 0.8 P(AC) = 0.2

P(B|A) = 0.3 P(B|AC) = 0.3

4) Suppose there are 100 students in your accounting class, 10 of whom are left-handed.
Two students are selected at random.
a) Draw a probability tree and insert the probabilities for each branch.

What is the probability of the following events?

b) Both are right-handed.

c) Both are left-handed.
d) One is right-handed and the other is left-handed
e) At least one is right-handed

5) Refer to Question 4. Suppose that three people are selected at random.

a) Draw a probability tree and insert the probabilities of each branch.
b) What is the probability of no right-handers, one right-hander, two right-handers,
three right-handers?

6) An aerospace company has submitted bids on two separate federal government

defense contracts. The company president believes that there is a 40% probability of
winning the first contract. If they win the first contract, the probability of winning the
second is 70%. However, if they lose the first contract, the president thinks that the
probability of winning the second contract decreases to 50%.
a) What is the probability that they win both contracts?
b) What is the probability that they lose both contracts?
c) What is the probability that they win only one contracts?
CHAPTER 1: PROBABILITY
TREE DIAGRAM AND BAYES THEOREM
7) A foreman for an injection-molding firm admits that on 10% of his shifts, he forgets
to shut off the injection machine on his line. This causes the machine to overheat,
increasing the probability from 2% to 20% that a defective molding will be produced
during the early morning run. What is the proportion of moulding from the early
morning run is defective?

8) A study undertaken by the Miami-Dade Supervisor of Elections in 2002 revealed

that 44% of registered voters are Democrats, 37% are Republicans, and 19% are
others. If two registered voters are selected at random, what is the probability that
both of them have the same party affiliation?

9) In early 2001, the U.S. Census Bureau started releasing the results of the 2000 census.
Among many other pieces of information, the bureau recoded the race or ethnicity of
the residents of every county in every state. From these results the bureau calculated
a 'diversity index,' which measures the probability that two people chosen at random
are of different races or ethnicities. Suppose that the census determined that in a
county in Wisconsin, 80% of its residents are white, 15% are black, and 5% are asian.
Calculate the diversity index for this county.

10) The chartered financial analyst (CFA) is a designation earned after a candidate has
taken three annual exams (CFA I,II, and III). The exams are taken in early June.
Candidates who pass an exam are eligible to take the exam for the next level in the
following year. The pass rates for levels I, II, and III are 0.57, 0.73, and 0.85,
respectively. Suppose that 3,000 candidates take the level I exam, 2,500 take the level
II exam and 2,000 take the level III exam in one particular year. Suppose that one
student is selected at random. What is the probability that he or she passed the
exam?

11) Refer to Question 1. Determine P(A|B).

12) Refer to Question 2. Find the following.

a) P(A|B)

b) P(Ac|B)

c) P(A|Bc)

d) P(Ac|Bc)

13) Refer to Question 7. The plant manager randomly selects a moulding from the early
morning run and discovers it is defective. What is the probability that the foreman
forgot to shut off the machine the previous night?
CHAPTER 1: PROBABILITY
TREE DIAGRAM AND BAYES THEOREM
14) Refer to Question 10. A randomly selected candidate who took a CFA exam tells you
that he has passed the exam. What is the probability that he took the CFA I exam?

15) Three airlines serve a small town in Ohio. Airline A has 50% of all scheduled flights,
airline B has 30%, and airline C has the remaining 20%. Their on-time rates are 80%,
65%, and 40%, respectively. A plane has just left on-time. What is the probability that
it was airline A?

16) The Consumer Electronics Company is considering marketing a new model of

television. In the past, 40% of the televisions introduced by the company have been
successful and 60% have been unsuccessful. Before introducing a television to the
marketplace, the marketing research department always conducts an extensive study
and releases a report, either favourable or unfavourable. In the past, 80% of the
successful televisions had received a favourable market research report and 30% of
the unsuccessful televisions had received a favourable report. For the new model of
television under consideration, the marketing research department has issued a
favourable report. What is the probability that the television will be successful?

17) The probability that a person has a certain disease is 0.03. Medical diagnostic tests
are available to determine whether a person has the disease. If the disease is present,
the probability that the medical diagnostic test will give a positive result (indicating
that the disease is present) is 0.9. If the disease is not present, the probability of a
positive test result (indicating that the disease is present when it is not, called a false
positive) is 0.02.
a) Suppose that the medical diagnostic test has given a positive result. What is the
probability that the disease is present?
b) What is the probability of a positive test result?

18) Refer to Question 17. Suppose that the probability that the test will return a false
positive is reduced from 0.02 to 0.01.
a) If the medical diagnostic test has given a positive result, what is the probability
that the disease is present?
b) If the medical diagnostic test has given a positive result, what is the probability
that the disease is not present?
c) If the medical diagnostic test has given a negative result, what is the probability
that the disease is not present?
d) If the medical diagnostic test has given a negative result, what is the probability
that the disease is present?
CHAPTER 1: PROBABILITY
TREE DIAGRAM AND BAYES THEOREM
19) An advertising executive is studying the television viewing habits of married men
and women during prime-time hours. Based on past viewing records, he has
determined that during prime time husbands are watching television 60% of the
time. It has also been determined that when the husband is watching television, 40%
of the time the wife is also watching. When the husband is not watching television,
30% of the time the wife is watching television. Find the probability that:
a) If the wife is watching television, the husband is also watching television.
b) The wife is watching television in prime time.

20) A paint-store chain produces and sells latex and semigloss paint. Based on long-
range sales, the probability that a customer will purchase latex is 0.75. Of those that
purchase latex, 60% also purchase rollers. But only 30% of semigloss paint buyers
purchase rollers. A randomly selected buyer purchases a roller and a can of paint.
What is the probability that the paint is Latex?
CHAPTER 1: PROBABILITY
TREE DIAGRAM AND BAYES THEOREM
ANSWERS
CHAPTER 1: PROBABILITY
TREE DIAGRAM AND BAYES THEOREM
CHAPTER 1: PROBABILITY
TREE DIAGRAM AND BAYES THEOREM
6)
a) 0.28
b) 0.30
c) 0.42

7) 0.038
8) 0.3666
9) 0.335
10) 0.698
11) 0.837

12)
a) 0.696
b) 0.304
c) 0.889
d) 0.111

13) 0.526
14) 0.327
15) 0.593
16) 0.64

17)
a) 0.582
b) 0.0464

18)
a) 0.736
b) 0.264
c) 0.997
d) 0.0032

19)
a) 0.67
b) 0.36

20) 0.8571