Problem 1:

a) d = 800 - 10p (given)

$20 per unit price

d = 800 - 10(20) = 600 units

$70 per unit price

d = 800 - 10(70) = 100 units

From the above calculation, the firm can sell 600 units with $20 per unit price and 100 units
with $70 per unit price.

b) d = 800 - 10p (given)

$26 per unit price

d = 800 - 10(26) = 540 units

$27 per unit price

d = 800 - 10(27) = 530 units

$42 per unit price

d = 800 - 10(42) = 380 units

$43 per unit price

d = 800 - 10(43) = 370 units

$68 per unit price

d = 800 - 10(68) = 120 units

$69 per unit price

d = 800 - 10(69) = 110 units

We can determine that the demand decreases by 1 unit as the price increases by $1.

c) Formula for Total Revenue = Demand * Unit Price

Total Revenue = (800 - 10p)*p

Total Revenue = 800p – 10p2

COMPARE THE QUESTIONS FROM TEXBOOK

d) Since Total Revenue = 800p – 10p2 is taken from (b )
$30 per unit price
Total Revenue = 800(30) - 10(30)2
Total Revenue = 15000 units

$40 per unit price

Total Revenue = 800(40) - 10(40)2
Total Revenue = 16000 units

$50 per unit price

Total Revenue = 800(50) - 10(50)2
Total Revenue = 15000 units

We can determine that when the Unit price is at $40 the total revenue is 16000 units which
is at maximum.

e) Since we can say the recommended price is $40,

The demand would be:

D = 800 - 10(40)
D = 400 units

The Total Revenue would be:

Total Revenue = 800(40) - 10(40)2
Total Revenue = 16000 units

Problem 2:

a) Joint Probability Table:

Automobile Insurance
Age Yes No Total
18 to 34 1500 340 1840
35 and over 1900 260 2160
3400 600 4000

Probability of the data:

Automobile Insurance
Age Yes No Total
18 to 34 0.375 0.085 0.46
35 and over 0.475 0.065 0.54
0.566 0.15 1.00
 b) 46% of the population falls into the age group of 18 to 34 and 54% of the population falls
into the age group of 35 and more.
c) The probability that a randomly selected individual does not have a automobile
insurance coverage is 0.15.

d) P(N|A) = P(N ꓵ A)
P(A)

P(N|A) = 0.085
0.46

P(N|A) = 0.1848

e) P(N|B) = P(N ꓵ B)
P(B)

P(N|B) = 0.065
0.54

P(N|B) = 0.1204

f) P(A|N) = P(N ꓵ A)
P(N)

P(A|N) = 0.085
0.15

P(A|N) = 0.567

g) According to the Probability Information, we can obtain that 56.6% of the people have
chosen to take an Automobile Insurance. From the table, we can also say that the 35
years and over individuals have opted for the automobile insurance majorly compared
to the 18 to 34 years old individuals.

Problem 3:

a) P(soil) = 1 - P(no oil)

= 1 - 0.30 (given)

P(soil) = 0.70
b) Revised Probabilities using Bayes’ Theorem

Ai P(Ai) P(S|Ai) P(S ꓵ Ai) P(Ai|S)

A1 0.5 0.2 0.10 0.4348
(High quality
soil)
A2 0.2 0.2 0.04 0.1739
(Medium
quality soil)
A3 0.3 0.3 0.09 0.3913
(No oil)
Total 1 0.7 0.23 1

Therefore,
New P(Oil) = 0.4348 + 0.1739 = 0.6087

Problem 4:

a) We will follow the Binomial Distribution for this problem.

n = 6, p = 0.74, x = 2

Binomial Distribution Formula:

F(x) = n! px (1 - p)n-x
x! (n-x)!

F(2) = 6! 0.742 (1 – 0.74)6-2

2! (6-2)!

F(2) = 0.0375

b) We have to find the probability for at least 2 respondents, therefore x ≥ 2

F(0) = 6! 0.740 (1 – 0.74)6-0

0! (6-0)!

F(0) = 0.00031

F(1) = 6! 0.741 (1 – 0.74)6-1

1! (6-1)!
F(1) = 0.00527
Therefore,

F(x ≥ 2) = 1 - F(0) + F(1)

= 1 – (0.00031) + (0.00527)

F(x ≥ 2) = 0.9944

c) n = 4, p = 0.74, x = 0

F(0) = 4! 0.740 (1 – 0.74)4-0

0! (4-0)!

F(0) = 0.00457

Problem 5:

a) We will follow Poisson Distribution for this problem.

λ = 10, x = 0

Poisson Distribution Formula:

F(x) = λx e-λ
x!

F(0) = 100e-10
0!

F(0) = 0.0000454

b) λ = 10, x ≤ 3

F(0) = 100e-10
0!

F(0) = 0.0000454
F(1) = 101e-10
1!

F(1) = 0.00045

F(2) = 102e-10
2!

F(2) = 0.00226

F(3) = 103e-10
3!

F(3) = 0.00756

Therefore,

F(x ≤ 3) = F(0) + F(1) + F(2) + F(3)

= 0.0000454 + 0.00045 + 0.00226 + 0.00756

F(x ≤ 3) = 0.0103

c) λ = 2.5/15 second, x = 0

F(0) = 2.50e-2.5
0!

F(0) = 0.08208

d) λ = 2.5/15 seconds, x ≥ 1

F(0) = 2.50e-2.5
0!

F(0) = 0.08208

Therefore,

F(x ≥ 1) = 1 - F(0)

F(x ≥ 1) = 0.9179
 Problem 6:

Sol:

Standard normal distribution

µ=6

σ = 0.589

X= 7

We have, z = x - µ
σ
z=7 - 6
0.589

Z = 1.78

We look at the cumulative probabilities table with the z values.

P (-∞ ≤ z ≤ 1.78) = 0.9625

P (z>0.9625) = 1 – P (-∞ ≤ z ≤ 0.9625)

P (z>0.9625) = 1 – 0.9625

P (z>0.9625) = 0.0375

Problem 7:

Sol:

Part a

Exponential probability distribution,

µ = 2.78

p (x ≤ 2) = ?

xo/µ
p( x ≤ x0 ) = 1 - e -
 P (x ≤ 2) = 1 – 2.718-2/2.78

P (x ≤ 2) = 0.5129

Part b

P (x > 5) =?

P (X > 5) = 1 – P (X ≤ 5)

P (X ≤ 5) = 1- (1 – e-5/2.78)

P (X ≤ 5) = 0.1655

Part c

P (x >2.78) = ?

P(x > 5) = 1 – p(x ≤ 2.78)

P (x ≤ 5) = 1 – (1 – e-2.78/2.78)

P (x ≤ 5) = 0.3678

Problem 9:

Sol:

µ=24

n=9

σ=1

part a

Distribution of mean for a normal distribution is calculated by actual mean of population (24)
 σx = σ _
√n

σx = _1_
√9

σx = 0.3333

P (x > 25) = ?

z= x-µ
σx

z = 25 -24
0.3333

Z=3

We will consider cumulative probability table foe z value

P (-∞ ≤ z ≤ 3) = 0.9986

P (z > 3) = 1 – P (-∞ ≤ z ≤3)

P (z > 3) = 0.0014

Part c

P(x < 24.5) = ?

z= x-µ
σx

z = 24.5 -24
0.3333

Z = 1.5

We will consider cumulative probability table foe z value

P (-∞ ≤ z ≤1.5) = 0.9332

P (x < 24.5) = 0.9332

Problem 11:
Final Output - We can conclude by rejecting Ho (null hypothesis), as the p-value is less than
α = 0.05. Also, since the mean of hap_sad score is lesser than 11 (test value).
According to this calculation, we can say that classical music makes the students sad.

Problem 12:
Final Output - We can conclude by rejecting Ho (null hypothesis), as the p-value is less than
α = 0.05. As per the calculations, we can say that the husband is less anxious than the wife
since the mean for the husband is less than the wife.

Problem 13:
Final Output – We can conclude by rejecting H0 (null hypothesis), as the p-value is less than
α = 0.05. As per the calculation, we can say that normal weight individuals eat slower than
the overweight individuals since the mean of the normal weight individuals are more than
the overweight individuals.