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Economics (İbn Haldun Üniversitesi)

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Chapter 4:
Discrete Probability Distributions

4.1
Daily computer sales is a discrete random variable that can take on no more than a
countable number of values.

4.2
The number of defective parts produced in daily production is a discrete random variable
that can take on no more than a countable number of values.

4.3
a. Discrete – a countable number
b. Discrete – countable
c. Continuous – dollar amounts are generally considered continuous, even though we
may truncate dollar amounts and treat dollar amounts as if they were the same as
discrete.
d. Discrete – countable

4.4
Discrete random variable – number of plays is countable.

4.5
Various answers including; the number of business phone calls on the first day of
business, the number of customers in the first month, the number of employees hired in
the first week, the number of proposals produced for new clients.

4.6
Total sales, advertising expenditures, sales of competitors.

4.7
Discrete – the number of voters supporting a candidate is a countable number of values.

4.8
Discrete – the number of purchases is a countable number of values.

4.9
Probability distribution of the number of heads in one toss of a fair coin
x-number of heads P(x)
0 .5
1 .5
4.10
Probability distribution of the face values when a fair die is rolled

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4-1

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4-2 Statistics for Business & Economics, 8th edition

x-face values P(x)

1 .166667
2 .166667
3 .166667
4 .166667
5 .166667
6 .166667

4.11
Probability distribution of the number of heads when three coins are tossed
independently
x-number of heads P(x)
0 .125
1 .375
2 .375
3 .125

4.12
Various answers
x –# of times missing class P(x) F(x)
0 .65 .65
1 .15 .80
2 .10 .90
3 .09 .99
4 .01 1.00

4.13
a. P(3 ≤ x < 6) = .20 + .20 + .15 = 0.55
b. P(x > 3) = .20 + .15 + .10 = 0.45
c. P(x ≤ 4) = .05 + .10 + .20+ .20 + .20 = 0.75
d. P(2 < x ≤ 5) = .20 + .20 + .15 = 0.55
4.14
a.
CUMDIST
a 0.18 0.18
b 0.32 0.5
c 0.25 0.75
d 0.07 0.82
e 0.03 0.85
f 0.15 1

b. P(X>B) =0.18
c. P(X<C) =0.25
4.15
a. The probability distribution function

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Chapter 4: Discrete Probability Distributions 4-3

b. The cumulative probability distribution function:

x P(x) F(x)
0 .40 .40
1 .60 1.00

c. The mean of the random variable X

x P(x) xP(x)
0 .40 0
1 .60 .60
.60
 x E ( X )  xP ( x ) = .60

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4-4 Statistics for Business & Economics, 8th edition

d. The variance of X
x P(x) xP(x) (x-mu)^2 (x-mu)^2P(x)
0 .40 0 .36 .144
1 .60 .60 .16 .096
.60 .240
 2x E[( X   x ) 2 ]  ( x   x ) 2 P( x) = .240

4.16
a. Probability distribution function

b. Cumulative probability distribution function:

x P(x) F(x)
0 .25 .25
1 .50 .75
2 .25 1.00

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Chapter 4: Discrete Probability Distributions 4-5

c. The mean of the random variable X

x P(x) xP(x)
0 .25 0
1 .50 .50
2 .25 .50
1.00
 x E ( X )  xP ( x ) = 1.00

d. The variance of X
x P(x) xP(x) (x-mu)^2 (x-mu)^2P(x)
0 .25 0 1 .25
1 .50 .50 0 0
2 .25 .50 1 .25
1.00 .50
 2x E[( X   x ) 2 ]  ( x   x ) 2 P( x) = .50

4.17
a. Probability distribution function

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4-6 Statistics for Business & Economics, 8th edition

b. Cumulative probability distribution function

x P(x) F(x)
0 .50 .50
1 .50 1.00

c. The mean of the random variable X

x P(x) xP(x)
0 .50 0
1 .50 .50
.50
 x E ( X )  xP ( x ) = .50

d. The variance of X
x P(x) xP(x) (x-mu)^2 (x-mu)^2P(x)
0 .50 0 .25 .125
1 .50 .50 .25 .125
.50 .25
 2x E[( X   x )2 ]  ( x   x )2 P ( x) = .25

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Chapter 4: Discrete Probability Distributions 4-7

4.18
a. Probability distribution function

b. Cumulative probability distribution function

x F(x)
0 0.28
1 0.28 + 0.36 = 0.64
2 0.64 + 0.23 = 0.87
3 0.87 + 0.09 = 0.96
4 0.96 + 0.04 = 1.00

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4-8 Statistics for Business & Economics, 8th edition

c. The mean of the number of returns of an automobile

x P(x) xP(x)
0 0.28 0
1 0.36 0.36
2 0.23 0.46
3 0.09 0.27
4 0.04 0.16
1.25
 x E ( X )  xP ( x ) = 1.25

d. The variance of the number of returns of an automobile

x P(x) xP(x) (x-mu)^2 (x-mu)^2P(x)
0 0.28 0 1.5625 0.4375
1 0.36 0.36 0.0625 0.0225
2 0.23 0.46 0.5625 0.129375
3 0.09 0.27 3.0625 0.275625
4 0.04 0.16 7.5625 0.3025
1.25 1.1675
 x E[( X   x ) ]  ( x   x ) P( x) = 1.1675
2 2 2

4.19
a. Probability distribution function

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Chapter 4: Discrete Probability Distributions 4-9

b. Cumulative probability distribution function

x F(x)
0 0.10
1 0.10 + 0.14 = 0.24
2 0.24 + 0.26 = 0.50
3 0.50 + 0.28 = 0.78
4 0.78 + 0.15 = 0.93
5 0.93 + 0.07 = 1.00

c. P(at least 3 orders) = P(x ≥ 3) = .28 + .15 + .07 = .5

b. The mean of the number of orders
x P(x) xP(x)
0 0.1 0
1 0.14 0.14
2 0.26 0.52
3 0.28 0.84
4 0.15 0.60
5 0.07 0.35
2.45
 x E ( X )  xP ( x ) = 2.45
e. The standard deviation of the number of orders
x P(x) xP(x) (x-mu)^2 (x-mu)^2P(x)
0 0.1 0 6.0025 0.60025
1 0.14 0.14 2.1025 0.29435
2 0.26 0.52 0.2025 0.05265
3 0.28 0.84 0.3025 0.0847
4 0.15 0.60 2.4025 0.360375
5 0.07 0.35 6.5025 0.455175
2.45 1.8475
 x E[( X   x ) ]  ( x   x ) P( x) = 1.8475
2 2 2

 x = 1.359
4.20
a. Probability distribution function

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4-10 Statistics for Business & Economics, 8th edition

b. Cumulative probability distribution function

x F(x)
44 0.04
45 0.04 + 0.13 = 0.17
46 0.17 + 0.21 = 0.38
47 0.38 + 0.29 = 0.67
48 0.67 + 0.20 = 0.87
49 0.87 + 0.10 = 0.97
50 0.97 + 0.03 = 1.00

c. P (46  X 48) P( X 46)  P( X 47)  P( X 48) 0.21  0.29  0.20 0.70
d.
P(at least one package contains at least 47 lbs) 1  P(both packages contain fewer than 47 lbs)
which is 1   P ( X  47) 1   0.38 1  0.1444 0.8556
2 2

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Chapter 4: Discrete Probability Distributions 4-11

e. Excel output:

 x = 46.9 pounds per bag

 2 x = 1.95 and  x = 1.3964 pounds per bag

f. Mean and standard deviation of profit per bag:

 = 2.5 – (.75 + .02X)

 = E() = 2.5 – (.75 + (.02)(46.9)) = $.812
  = |.02|(1.3964) = $.0279
4.21
a. Probability distribution function

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4-12 Statistics for Business & Economics, 8th edition

b. Cumulative probability distribution function

x F(x)
20 0.02
21 0.02 + 0.12 = 0.14
22 0.14 + 0.23 = 0.37
23 0.37 + 0.31 = 0.68
24 0.68 + 0.19 = 0.87
25 0.87 + 0.08 = 0.95
26 0.95 + 0.03 = 0.98
27 0.98 + 0.02 = 1.00

c. P ( X 24) = 0.19 + 0.08 + 0.03 + 0.02 = 0.32

d. P(both days have fewer than 23 riders) [ P( X  23)]2 [ P ( X 22)]2 (0.37) 2 0.1369

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Chapter 4: Discrete Probability Distributions 4-13

e.  = 22.99 riders  2 = 1.9899  = 1.4106 riders

Bus Riders P(x) F(x) Mean Variance
20 0.02 0.02 0.40 0.17880200
21 0.12 0.14 2.52 0.47521200
22 0.23 0.37 5.06 0.22542300
23 0.31 0.68 7.13 0.00003100
24 0.19 0.87 4.56 0.19381900
25 0.08 0.95 2.00 0.32320800
26 0.03 0.98 0.78 0.27180300
27 0.02 1.00 0.54 0.32160200
1.00 22.99 1.98990000
S.D. 1.41063815

f. Let payment r 1.50 X .

r E (r ) 1.50(22.99) 34.485
 r 1.5 (1.4106) 2.1159

4.22
a. Probability distribution function
X 0 1 2
P(x) 0.81 0.18 .01
Px(0) = (.90)(.90) = .81
Px(1) = (.90)(.10) + (.10)(.90) = .18
Px(2) = (.10)(.10) = .01
b. P(Y = 0) = 18/20 × 17/19 = 153/190
P(Y=1) = (2/20 × 18/19) + (18/20 × 2/19) = 36/190
P(Y=2) = 2/20 × 1/19 = 1/190
The answer in part b. is different from part a. because in part b. the probability of
picking a defective part on the second draw depends upon the result of the first draw.
c.  x = 0(.81) + .18 + 2(.01) = 0.2 defect
 2 x = .22 – (.20)2 = .18
d.  y = 0(153/190) + (36/190) + 2(1/190) = 38/190 = 0.2 defect
 2 y = 40/190 – (.20)2 = .1705

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4-14 Statistics for Business & Economics, 8th edition

4.23
a. Probability distribution function of X
Px(1) = .40
Px(2) = (.40)(.60) = .24
Px(3) = (.40)(.60) 2 = .144
Px(4) = (.40)(.60) 3 = .0864
Px(x) = (.40)(.60) x-1 for x = 5, 6, 7, 8

b. Cumulative probability distribution function of X

Fx(1) = .40
Fx(2) = .64
Fx(3) = .784
Fx(4) = .8704
Fx(x) = 1 – (.6)x for x = 5, 6, 7, 8

c. P(X  3) = 1 – P(X < 3) = 1 – .64 = .36

4.24
a. = .3369
b. = .7576

4.25
 = E(X) = 0 + .15 + 2(.19) + 3(.26) + 4(.19) + 5(.11) = 2.62 phone calls
 2 = 0 + .15 + 4(.19) + 9(.26) + 16(.19) + 25(.11) – (2.62) 2 = 2.1756
 = 1.475

4.26
 = 3.29  2 = 1.3259  = 1.1515
Rating P(x) Mean Variance
1 0.07 0.07 0.367087
2 0.19 0.38 0.316179
3 0.28 0.84 0.023548
4 0.30 1.20 0.15123
5 0.16 0.80 0.467856
1.00 3.29 1.3259
S.D. 1.151477

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Chapter 4: Discrete Probability Distributions 4-15

4.27
 = profit
X = number of requests
S = number of papers stocked

 = .2S – .05(X – S) if X > S

= .2X if X = S
= .2X - .7(S – X) if X < S

Level of profit for all combinations of S and X:

S\X 0 1 2 3 4 5
0 0.00 -0.05 -0.10 -0.15 -0.20 -0.25
1 -0.70 0.20 0.15 0.10 0.05 0.00
2 -1.40 -0.50 0.40 0.35 0.30 0.25
3 -2.10 -1.20 -0.30 0.60 0.55 0.50
4 -2.80 -1.90 -1.00 -0.10 0.80 0.75
5 -3.50 -2.60 -1.70 -0.80 0.10 1.00

E()|(S=0) = 0 +(–.05)(.16) + (–.1)(.18) + (–.15)(.32) + (–.2)(.14) + (–.25)(.08) = –.122

E()|(S=1) = (–.7)(.12) + (.2)(.16) + (.15)(.18) + (.1)(.32) + (.05)(.14) = .014
E()|(S=2) = (–1.4)(.12) + (–.5)(.16) + (.4)(.18) + (.35)(.32) + (.3)(.14) + (.25)(.08) = –.002
E()|(S=3) = (–2.1)(.12) + (–1.2)(.16) + (–.3)(.18) + (.6)(.32) + (.55)(.14) + (.5)(.08) = –.189
E()|(S=4) = (–2.8)(.12) + (–1.9)(.16) + (–1)(.18) + (–.1)(.32) + (.8)(.14) + (.75)(.08) = –.68
E()|(S=5) = (–3.5)(.12) + (–2.6)(.16) + (–1.7)(.18) + (–.8)(.32) + (.1)(.14) + (1)(.08) = –1.304

The expected loss if four newspapers are order is $0.68.

Store owner maximizes expected profit by ordering one newspaper.

4.28
a.  = 1.82 breakdowns  2 = 1.0276  = 1.0137 breakdowns
Breakdowns P(x) Mean Variance Cost P(x) Mean Variance
0 0.1 0 0.33124 0 0.1 0 745290
1 0.26 0.26 0.174824 1500 0.26 390 393354
2 0.42 0.84 0.013608 3000 0.42 1260 30618
3 0.16 0.48 0.222784 4500 0.16 720 501264
4 0.06 0.24 0.285144 6000 0.06 360 641574
1.00 1.82 1.0276 1.00 2730 2312100
S.D. 1.013706 S.D. 1520.559

b. Cost: C = 1500X
E(C) = 1500(1.82) =  = $2,730
 = |1500|(1.0137) = $1,520.559

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4-16 Statistics for Business & Economics, 8th edition

4.29

Expected profits are highest for Strategy 1 at $650 vs. $550 for Strategy 2 and $400 for
Strategy 3. The strategy to recommend would depend on the risk aversion of the
investor. The variability of Strategy 1 is much higher than the variability of Strategy 2.
The standard deviation of Strategy 1 is $3,927.7856 vs. $567.89 for Strategy 2. Many
risk averse investors would likely adopt Strategy 2 with its lower standard deviation and
hence, lower risk.

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Chapter 4: Discrete Probability Distributions 4-17

4.30
Mean and variance of a Bernoulli random variable with P = .5:
 x E ( X )  xP( x) (0)(1  P)  (1) P P .5
 2 x E[( X   x ) 2 ]  ( x   x ) 2 P( x) (0  P) 2 (1  P)  (1  P) 2 P P(1  P)
 2 x P(1  P ) .5(1  .5) .25
4.31
Probability of a binomial random variable with P = .5 and n = 12, x = 7 and x less than 6
Cumulative Distribution Function
Binomial with n = 12 and p = 0.5

x P( X <= x )
0 0.000244
1 0.003174
2 0.019287
3 0.072998
4 0.193848
5 0.387207
6 0.612793
7 0.806152
8 0.927002
9 0.980713

P(X = 7) = .806152 – .612793 = .1934

P(X < 6) = P(X ≤ 5) = .3872

4.32
Probability of a binomial random variable with P = .3 and n = 14, x = 7 and x less than 6
Cumulative Distribution Function
Binomial with n = 14 and p = 0.3

x P( X <= x )
0 0.006782
1 0.047476
2 0.160836
3 0.355167
4 0.584201
5 0.780516
6 0.906718
7 0.968531
8 0.991711

P(X = 7) = .968531 – .906718 = .06181

P(X < 6) = P(X ≤ 5) = .7805

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4-18 Statistics for Business & Economics, 8th edition

4.33
Probability of a binomial random variable with P = .4 and n = 20, x = 9 and x less than 7
Cumulative Distribution Function
Binomial with n = 20 and p = 0.4

x P( X <= x )
0 0.000037
1 0.000524
2 0.003611
3 0.015961
4 0.050952
5 0.125599
6 0.250011
7 0.415893
8 0.595599
9 0.755337
10 0.872479

P(X = 9) = .755337 – .595599 = .1597

P(X < 7) = P(X ≤ 6) = .250011

4.34
Probability of a binomial random variable with P = .7 and n = 18, x = 12 and x less than
6

Cumulative Distribution Function

Binomial with n = 18 and p = 0.7

x P( X <= x )
0 0.000000
1 0.000000
2 0.000000
3 0.000004
4 0.000039
5 0.000269
6 0.001430
7 0.006073
8 0.020968
9 0.059586
10 0.140683
11 0.278304
12 0.465620
13 0.667345

P(X = 12) = .465620 – .278304 = .1873

P(X < 6) = P(X ≤ 5) = .000269

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Chapter 4: Discrete Probability Distributions 4-19

4.35
Cumulative Distribution Function
Binomial with n = 6 and p = 0.0500000

x P( X <= x )
0.00 0.7351
1.00 0.9672
2.00 0.9978
3.00 0.9999
4.00 1.0000
5.00 1.0000

a. P(X = 0) = .7351
b. P(X = 1) = P(X ≤ 1) – P(X ≤ 0) = .9672 – .7351 = .2321
c. P(X  2) = 1 – P(X ≤ 1) = 1 – .9672 = .0328

4.36
Cumulative Distribution Function
Binomial with n = 5 and p = 0.250000

x P( X <= x )
0.00 0.2373
1.00 0.6328
2.00 0.8965
3.00 0.9844
4.00 0.9990
5.00 1.0000

a. P(X  1) = 1 – P(X = 0) = 1 – .2373 = .7627

b. P(X  3) = 1 – P(X ≤ 2) = 1 – .8965 = .1035

4.37
Cumulative Distribution Function
Binomial with n = 6 and p = 0.700000

x P( X <= x )
0.00 0.0007
1.00 0.0109
2.00 0.0705
3.00 0.2557
4.00 0.5798
5.00 0.8824
6.00 1.0000

a. P(X  2) = 1 – P(X ≤ 1) = 1 – .0109 = .9891

b. P(at least 2 of the 6 will not give up their jobs) = P(at most 4 of the 6 will give up
their jobs) = P(X  4) = .5798

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4-20 Statistics for Business & Economics, 8th edition

4.38
a. 0.4
b. 0.7
c. Independent events= 0.2 x 0.2 x 0.2= 0.008

4.39
Cumulative Distribution Function
Binomial with n = 6 and p = 0.1500000
x P( X <= x )
0.00 0.37715
1.00 0.77648
2.00 0.95266
3.00 0.99411
4.00 0.99960
5.00 0.99999
6.00 1.00000

a. P(X = 6) = P(X ≤ 6) – P(X ≤ 5) = 1.00000 – .99999 = .00001

b. P(X = 0) = .3771
c. P(X > 1) = 1 – P(X ≤ 1) = 1 – .7765 = .2235

4.40

All events are independent.

a. .05+.04 = 0.09
b. 1-.09=.91
c. 1- .27 =.73

Cumulative Distribution Function

Binomial with n = 4 and p = 0.500000

x P( X <= x)
0.00 0.0625
1.00 0.3125
2.00 0.6875
3.00 0.9375
4.00 1.0000

a. P(X  2) = 1 – P(X ≤ 1) = 1 – .3125 = .6875

b. E ( X ) np  5(.5) = 2.5 wins
c. E ( X )  1  np  1 + 4(.5) = 3 wins

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Chapter 4: Discrete Probability Distributions 4-21

4.41 Finding the probability of overbooking a flight.

The probability of a ticketed passenger showing up for a flight is 1 – .2 = .8. Therefore,
based on n = 10 tickets sold and a probability (p) of the ticketed passenger showing up, the
probabilities of the binomial distribution are shown below.

Probability Density Function

Binomial with n = 10 and p = 0.8

x P( X = x )
0 0.000000
1 0.000004
2 0.000074
3 0.000786
4 0.005505
5 0.026424
6 0.088080
7 0.201327
8 0.301990
9 0.268435
10 0.107374

Since 10% of the time 9 tickets are sold and 5% of the time 10 tickets are sold, the
proportion of flights where the number of ticketed passengers showing up exceeds the
number of available seats is: (.10)(.268435) + (.05)(.107374) = .0322.

4.42
a. Same probability for each outcome and independency
b. 12 = .8 x 15
c. Standard deviation = 1.55
d. = 0.035.

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4-22 Statistics for Business & Economics, 8th edition

4.43

a. E(X) = 50(.15) = 7.5

 x  50(.15)(.85) 2.5249

b. Let Z = 100X
E(Z) = 100(7.5) = $750
 z = |100|(2.5249) = $252.49

4.44

a. E(X) = 2000(.032) = 64
 x  2000(.032)(.968) 7.871
b. Let Z = 10X
E(Z) = 10(64) = $640
 z = |10|(7.871) = $78.71

4.45

 x = 2.0 sales OR  x = np = 5(.4) = 2.0 sales

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Chapter 4: Discrete Probability Distributions 4-23

4.46 a. E(X) =  x = np = 620(.78) = 483.6,  x = 620(.78)(.22) = 10.3146

b. Let Z = 2X
E(Z) = 2(483.6) = $967.20
 z = |2|(10.3146) = $20.6292

4.47 a. P(X = 0) + P(X = 1) = (.95)16 + 16(.05)(.95)15 = .8108

b. P(X = 0) + P(X = 1) = (.85)16 + 16(.15)(.85)15 = .2839
c. P(X = 0) + P(X = 1) = (.75)16 + 16(.25)(.75)15 = .0635

4.48 The acceptance rules have the following probabilities:

(i) Rule 1: P(X = 0) = (.8)10 = .1074

(ii) Rule 2: P(X ≤ 1) = (.8)20 + 20(.2)(.8) 19 = .0692

Therefore, the second acceptance rule has the smaller probability of accepting a shipment
containing 20% defectives.

(( 201 )(.1)(.9)19 )(.7)

4.49 P(Supplier1|x=1) = 20  .916
(( 1 )(.1)(.9)19 )(.7)  (( 201 )(.2)(.8)19 )(.3)

4.50
Probability Density Function
Poisson with mean = 2.4

x P( X = x )
0 0.090718
1 0.217723
2 0.261268
3 0.209014
4 0.125408
5 0.060196
6 0.024078
7 0.008255

P(X = 4) = .125408

4.51
Cumulative Distribution Function
Poisson with mean = 4.4

x P( X <= x )
0 0.012277
1 0.066298
2 0.185142
3 0.359448
4 0.551184
5 0.719912
6 0.843645
7 0.921421
8 0.964197

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4-24 Statistics for Business & Economics, 8th edition

P(X > 7) = 1 – P(X ≤ 7) = 1 – .921421 = .07858

4.52
Cumulative Distribution Function
Poisson with mean = 3.4

x P( X <= x )
0 0.033373
1 0.146842
2 0.339740
3 0.558357
4 0.744182
5 0.870542
6 0.942147

P(X < 6) = .870542

4.53
Cumulative Distribution Function
Poisson with mean = 8

x P( X <= x )
0 0.000335
1 0.003019
2 0.013754
3 0.042380
4 0.099632
5 0.191236
6 0.313374
7 0.452961
8 0.592547
9 0.716624

P(X ≤ 9) = .716624

4.54
Cumulative Distribution Function
Poisson with mu = 3.00000

x P( X <= x )
0.00 0.0498
1.00 0.1991
2.00 0.4232
3.00 0.6472
4.00 0.8153
5.00 0.9161
6.00 0.9665
7.00 0.9881
8.00 0.9962
9.00 0.9989
10.00 0.9997

P(X  2) = .4232

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Chapter 4: Discrete Probability Distributions 4-25

4.55
Cumulative Distribution Function
Poisson with mu = 2.60000

x P( X <= x )
0.00 0.0743
1.00 0.2674
2.00 0.5184
3.00 0.7360
4.00 0.8774
5.00 0.9510
6.00 0.9828
7.00 0.9947
8.00 0.9985
9.00 0.9996
10.00 0.9999

a. P(X < 2) = P(X  1) = .2674

b. P(X > 3) = 1 – P(X  3) = 1 – .7360 = .2640

4.56
Cumulative Distribution Function
Poisson with mu = 4.20000

x P( X <= x )
0.00 0.0150
1.00 0.0780
2.00 0.2102
3.00 0.3954
4.00 0.5898
5.00 0.7531
6.00 0.8675
7.00 0.9361
8.00 0.9721
9.00 0.9889
10.00 0.9959

P(X  3) = 1 – P(X  2) = 1 – .2102 = .7898

4.57
Cumulative Distribution Function
Poisson with mu = 3.20000

x P( X <= x )
0.00 0.0408
1.00 0.1712
2.00 0.3799
3.00 0.6025
4.00 0.7806
5.00 0.8946
6.00 0.9554
7.00 0.9832
8.00 0.9943
9.00 0.9982
10.00 0.9995

a. P(X < 2) = P(X  1) = .1712

b. P(X > 4) = 1 – P(X  4) = 1 – .7806 = .2194

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4-26 Statistics for Business & Economics, 8th edition

4.58
n = 100, p = .045.

Using the Poisson approximation to the binomial distribution,

λ = 100 × .045 = 4.5

Cumulative Distribution Function

Poisson with mu = 4.50000

x P( X <= x )
0.00 0.0111
1.00 0.0611
2.00 0.1736
3.00 0.3423
4.00 0.5321
5.00 0.7029
6.00 0.8311
7.00 0.9134
8.00 0.9597
9.00 0.9829
10.00 0.9933

P(X < 3) = P(X  2) = .1736

4.59
n = 250, p = .01.

Using the Poisson approximation to the binomial distribution,

λ = 250 × .01 = 2.5

Cumulative Distribution Function

Poisson with mu = 2.50000

x P( X <= x )
0.00 0.0821
1.00 0.2873
2.00 0.5438
3.00 0.7576
4.00 0.8912
5.00 0.9580
6.00 0.9858
7.00 0.9958
8.00 0.9989
9.00 0.9997
10.00 0.9999

P(X < 4) = P(X  3) = .7576

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Chapter 4: Discrete Probability Distributions 4-27

4.60
n = 6000, p = .001.

Using the Poisson approximation to the binomial distribution,

λ = 6000 × .001 = 6

Cumulative Distribution Function

Poisson with mu = 6.00000

x P( X <= x )
0.00 0.0025
1.00 0.0174
2.00 0.0620
3.00 0.1512
4.00 0.2851
5.00 0.4457
6.00 0.6063
7.00 0.7440
8.00 0.8472
9.00 0.9161
10.00 0.9574

P(X  3) = 1 – P(X  2) = 1 – .0620 = .9380

4.61
n = 100, p = .06.

Using the Poisson approximation to the binomial distribution,

λ = 100 × .06 = 6

Cumulative Distribution Function

Poisson with mu = 6.00000

x P( X <= x )
0.00 0.0025
1.00 0.0174
2.00 0.0620
3.00 0.1512
4.00 0.2851
5.00 0.4457
6.00 0.6063
7.00 0.7440
8.00 0.8472
9.00 0.9161
10.00 0.9574

P(X  3) = 1 – P(X  2) = 1 – .0620 = .9380

The calculations to find the exact binomial probabilities would be to use the binomial
formula for each of the individual probabilities: P(3) + P(4) + P(5) + P(6) + …+
P(100). Thus, the binomial formula would need to be utilized 98 times to calculate the
exact probability.

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4-28 Statistics for Business & Economics, 8th edition

4.62
Two models are possible – the poisson distribution is appropriate when the warehouse is
serviced by many thousands of independent truckers where the mean number of
‘successes’ is relatively small. However, under the assumption of a small fleet of 10
trucks with a probability of any truck arriving during a given hour is .1, then the
binomial distribution is the more appropriate model. Both models yield similar, although
not identical, probabilities.
Cumulative Distribution Function
Poisson with mean = 1

x P( X <= x )
0 0.36788
1 0.73576
2 0.91970
3 0.98101
4 0.99634
5 0.99941
6 0.99992
7 0.99999
8 1.00000
9 1.00000
10 1.00000

Cumulative Distribution Function

Binomial with n = 10 and p = 0.1

x P( X <= x )
0 0.34868
1 0.73610
2 0.92981
3 0.98720
4 0.99837
5 0.99985
6 0.99999
7 1.00000
8 1.00000
9 1.00000
10 1.00000

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Chapter 4: Discrete Probability Distributions 4-29

4.63
Probability Density Function
Hypergeometric with N = 30, M = 15, and n = 14

x P( X = x )
0 0.000000
1 0.000011
2 0.000329
3 0.004271
4 0.028187
5 0.103354
6 0.221473
7 0.284751

P(X = 7) = .284751

4.64
Probability Density Function
Hypergeometric with N = 80, M = 42, and n = 20

x P( X = x )
0 0.000000
1 0.000000
2 0.000008
3 0.000093
4 0.000704
5 0.003723
6 0.014348
7 0.041322
8 0.090392
9 0.151769

P(X = 9) = .151769

4.65
Probability Density Function
Hypergeometric with N = 40, M = 25, and n = 5

x P( X = x )
0 0.004564
1 0.051861
2 0.207444
3 0.367017

P(X = 3) = .367017

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4-30 Statistics for Business & Economics, 8th edition

4.66
Probability Density Function
Hypergeometric with N = 100, M = 50, and n = 15

x P( X = x )
0 0.000009
1 0.000185
2 0.001716
3 0.009392
4 0.033957
5 0.085911
6 0.157154
7 0.211677
8 0.211677

P(X = 8) = .211677

4.67
a.
Cumulative Distribution Function
Hypergeometric with N = 16, M = 4, and n = 4

x P( X <= x )
0.00 0.2720
1.00 0.7555
2.00 0.9731
3.00 0.9995
4.00 1.0000

P(Shipment is accepted) = P(X = 0) with N = 16, S = 4, n = 4 = .2720.

b.
Cumulative Distribution Function
Hypergeometric with N = 16, M = 1, and n = 4

x P( X <= x )
0.00 0.7500
1.00 1.0000
2.00 1.0000
3.00 1.0000
4.00 1.0000

P(Shipment is accepted) = P(X = 0) with N = 16, S = 1, n = 4: = .7500

c.
Cumulative Distribution Function
Hypergeometric with N = 16, M = 1, and n = 4

x P( X <= x )
0.00 0.7500
1.00 1.0000
2.00 1.0000
3.00 1.0000
4.00 1.0000

P(Shipment is rejected) can be found by taking 1 minus the P(Shipment is accepted) = [1

– P(X = 0)] with N = 16, S = 1, n = 4 = [1 – .75] = .25

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Chapter 4: Discrete Probability Distributions 4-31

4.68
Cumulative Distribution Function
Hypergeometric with N = 16, X = 8, and n = 8

x P( X <= x )
1.00 0.0051
2.00 0.0660
3.00 0.3096
4.00 0.6904
5.00 0.9340
6.00 0.9949
7.00 0.9999
8.00 1.0000

P(X = 4) = P(X  4) – P(X  3) = .6904 – .3096 = .3808

4.69
Cumulative Distribution Function
Hypergeometric with N = 12, X = 4, and n = 3

x P( X <= x )
0.00 0.2545
1.00 0.7636
2.00 0.9818
3.00 1.0000

P(X  2) = 1 – P(X  1) = 1 – .7636 = .2364

4.70
Cumulative Distribution Function
Hypergeometric with N = 10, X = 5, and n = 6

x P( X <= x )
0.00 0.0000
1.00 0.0238
2.00 0.2619
3.00 0.7381
4.00 0.9762
5.00 1.0000

P(X < 3) = P(X  2) = .2619

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4-32 Statistics for Business & Economics, 8th edition

4.71
a. P(X=0) = 0.2725
b. P(X=1) = 0.3542
c. P(X=3) = 0.0997

4.72
a. Marginal probability distributions for X and Y:

Exercise_4.72 X_4.72
Y_4.72 1 2 P(y) Mean of Y Var of Y StDev of Y
0 0.25 0.25 0.5 0 0.125
1 0.25 0.25 0.5 0.5 0.125
P(x) 0.5 0.5 1 0.5 0.25 0.5

Mean of X 0.5 1 1.5

Var of X 0.125 0.125 0.25
StDev of X 0.5

xyP(x,y) 0.25 0.5 0.75

Cov(x,y) =
∑∑xyP(x,y)-μxμy 0

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Chapter 4: Discrete Probability Distributions 4-33

b. The covariance and correlation for X and Y:

Cov( X , Y )  xyP ( x, y )   x  y = .75 – (1.5)(.5) = 0.0
x y

Cov( X , Y )
 Corr ( X , Y )  = 0.0/(.5)(.5) = 0.0
 x y
Note that when covariance between X and Y is equal to zero, it follows that the
correlation between X and Y is also zero.

c. The mean and variance for the linear function W = X + Y:

W a  x  b y = 1(1.5) + 1(.5) = 2.0
 2W a 2 2 X  b 2 2Y  2abCov ( X , Y ) 12 (.25)  12 (.25)  2(1)(1)(0.0) .50

4.73
a. Marginal probability distributions for X and Y:

Exercise_4.73 X_4.73
Y_4.73 1 2 P(y) Mean of Y Var of Y StDev of Y
0 0.3 0.2 0.5 0 0.125
1 0.25 0.25 0.5 0.5 0.125
P(x) 0.55 0.45 1 0.5 0.25 0.5

Mean of X 0.55 0.9 1.45

Var of X 0.111375 0.136125 0.2475
StDev of X 0.497494

xyP(x,y) 0.25 0.5 0.75

Cov(x,y) =
∑∑xyP(x,y)-μxμy 0.025

b. The covariance and correlation for X and Y:

Cov( X , Y )  xyP ( x, y )   x  y = .75 – (1.45)(.5) = .025
x y

Cov( X , Y )
 Corr ( X , Y )  = .025/(.497494)(.5) = 0.1005
 x y

c. The mean and variance for the linear function W = 2X + Y

W a x  b y = 2(1.45) + 1(.5) = 3.4
 2W a 2 2 X  b 2 2Y  2abCov( X , Y ) 22 (.2475) 12 (.25)  2(2)(1)(0.025) 1.34

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4-34 Statistics for Business & Economics, 8th edition

4.74
a. Marginal probability distributions for X and Y:

Exercise_4.74 X_4.74
Y_4.74 1 2 P(y) Mean of Y Var of Y StDev of Y
0 0.7 0 0.7 0 0.063
1 0 0.3 0.3 0.3 0.147
P(x) 0.7 0.3 1 0.3 0.21 0.458258

Mean of X 0.7 0.6 1.3

Var of X 0.063 0.147 0.21
StDev of X 0.458258

xyP(x,y) 0 0.6 0.6

Cov(x,y) =
∑∑xyP(x,y)-μxμy 0.21

b. The covariance and correlation for X and Y:

Cov( X , Y )  xyP ( x, y )   x  y = .60 – (1.3)(.3) = .21
x y

Cov( X , Y )
 Corr ( X , Y )  = .21/(.458258)(.458258) = 1.00
 x y

c. The mean and variance for the linear function W = 3X + 4Y:

W a  x  b y = 3(1.3) + 4(.3) = 5.1
 2W a 2 2 X  b 2 2Y  2abCov( X , Y ) 32 (.21)  42 (.21)  2(3)(4)(.21) 10.29

4.75
a. Marginal probability distributions for X and Y:

Exercise_4.75 X_4.75
Y_4.75 1 2 P(y) Mean of Y Var of Y StDev of Y
0 0 0.6 0.6 0 0.096
1 0.4 0 0.4 0.4 0.144
P(x) 0.4 0.6 1 0.4 0.24 0.489898

Mean of X 0.4 1.2 1.6

Var of X 0.144 0.096 0.24
StDev of X 0.489898

xyP(x,y) 0.4 0 0.4

Cov(x,y) =
∑∑xyP(x,y)-μxμy -0.24

b. The covariance and correlation for X and Y:

Cov( X , Y )  xyP ( x, y )   x  y = .4 – (1.6)(.4) = –.24
x y

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Chapter 4: Discrete Probability Distributions 4-35

Cov( X , Y )
 Corr ( X , Y )  = –.24/(.489898)(.489898) = –1.00
 x y

c. The mean and variance for the linear function W = 2X – 4Y:

W a  x  b y = (2)(1.6) + (–4)(.4) = 1.6
 2W a 2 2 X  b 2 2Y  2abCov( X , Y ) 22 (.24)  ( 4)2 (.24)  2(2)( 4)( .24) 8.64

4.76
a. Marginal probability distributions for X and Y:

Exercise_4.76 X_4.76
Y_4.76 1 2 P(y) Mean of Y Var of Y StDev of Y
0 0.7 0 0.7 0 0.063
1 0 0.3 0.3 0.3 0.147
P(x) 0.7 0.3 1 0.3 0.21 0.458258

Mean of X 0.7 0.6 1.3

Var of X 0.063 0.147 0.21
StDev of X 0.458258

xyP(x,y) 0 0.6 0.6

Cov(x,y) =
∑∑xyP(x,y)-μxμy 0.21

b. The covariance and correlation for X and Y:

Cov( X , Y )  xyP ( x, y )   x  y = .60 – (1.3)(.3) = .21
x y

Cov( X , Y )
 Corr ( X , Y )  = .21/(.458258)(.458258) = 1.00
 x y

c. The mean and variance for the linear function W = 10X – 8Y

W a  x  b y = (10)(1.3) + (–8)(.3) = 10.6
 2W a 2 2 X  b 2 2Y  2abCov( X , Y ) 102 (.21)  ( 8) 2 (.21)  2(10)( 8)(.21) .84

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4-36 Statistics for Business & Economics, 8th edition

4.77 a. Px(0) = .07 + .07 + .06 + .02 = .22

Px(1) = .09 + .06 + .07 + .04 = .26
Px(2) = .06 + .07 + .14 + .16 = .43
Px(3) = .01 + .01 + .03 + .04 = .09
 x = 0 + .26 + 2(.43) + 3(.09) = 1.39
b. Py(0) = .07 + .09 + .06 + .01 = .23
Py(1) = .07 + .06 + .07 + .01 = .21
Py(2) = .06 + .07 + .14 + .03 = .30
Py(3) = .02 + .04 + .16 + .04 = .26
 y = 0 + .21 + 2(.3) + 3(.26) = 1.59
c. PY|X(0|3) = .01/.09 = .1111
PY|X(1|3) = .01/.09 = .1111
PY|X(2|3) = .03/.09 = .3333
PY|X(3|3) = .04/.09 = .4444
d. Cov( X , Y ) E ( XY )   x  y
E(XY) = 0 + 1(1)(.06) + 1(2)(.07) + 1(3)(.04) + 2(1)(.07) + 2(2)(.14)
+ 2(3)(.16) + 3(1)(.01) + 3(2)(.03) + 3(3)(.04) = 2.55

Cov( X , Y ) 2.55  (1.39)(1.59) = .3399

e. No, because Cov( X , Y ) 0 .

4.78 a. Joint cumulative probability function at X = 1, Y = 4:

FX,Y(1,4) = .09 + .07 + .14 + .23 = .53
b. PY|X(3|0) = .09/.19 = .4737
PY|X(4|0) = .07/.19 = .3684
PY|X(5|0) = .03/.19 = .1579
c. PX|Y(0|4) = .07/.46 = .1522
PX|Y(1|4) = .23/.46 = .5
PX|Y(2|4) = .16/.46 = .3478
d. E(XY) = 0 + 1(3)(.14) + 1(4)(.23) + 1(5)(.10) + 2(3)(.07) + 2(4)(.16) +
2(5)(.11) = 4.64
 x 0  .47  2(.34) 1.15
 y 3(.3)  4(.46)  5(.24) 3.94
Cov( X , Y ) 4.64  (1.15)(3.94) = .109
The covariance indicates that there is a positive association between the number of
lines in the advertisement and the volume of inquiries.
e. No, because Cov( X , Y ) 0 .

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Chapter 4: Discrete Probability Distributions 4-37

4.79 a. Py(0) = .08 + .03 + .01 = .12

Py(1) = .13 + .08 + .03 = .24
Py(2) = .09 + .08 + .06 = .23
Py(3) = .06 + .09 + .08 = .23
Py(4) = .03 + .07 + .08 = .18
b. PY|X(y|3) = 1/26; 3/26; 6/26; 8/26; 8/26
c. No, because Px,y(3,4) = .08 ≠ .0468 = Px(3)Py(4).

4.80 a. P(0,0)=.54, P(0,1)=.30, P(1,0)=.01, P(1,1)=.15

b. PY|X(0|1) = 1/16 = .0625; PY|X(1|1) = 15/16 = .9375
c. E(XY) = .15
 x 0  1(.16) .16
 y 0  1(.45) .45
Cov( X , Y ) .15  (.16)(.45) .078
The covariance indicates that there is a positive association between regular watchers
of a late-night talk show and brand-name recognition.
4.81 a.
Y/X 0 1 Total
0 .704 .168 .872
1 .096 .032 .128
Total .80 .20 1.00

b. PY|X(y|0) = .88; .12

c. Px(0) = .80
Px(1) = .20
Py(0) = .872
Py(1) = .128

d. E(XY) = .032;
 x 0 +1(.20) = .20 ,  y 0  1(.128) .128
Cov( X , Y ) .032  (.20)(.128) .0064
The covariance indicates that there is a positive association between X and Y, professors
are more likely to be away from the office on Friday than during the other days.

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4-38 Statistics for Business & Economics, 8th edition

4.82 Because of independence, the joint probabilities are the products of the marginal
probabilities, so P(0,0)=.0216, and so on.
Y Service
X Food 0 1 2 3 P(x) Mean of X Var of X StDev of X
0 0.0216 0.0456 0.0408 0.012 0.12 0 0.322752
1 0.0522 0.1102 0.0986 0.029 0.29 0.29 0.118784
2 0.0756 0.1596 0.1428 0.042 0.42 0.84 0.054432
3 0.0306 0.0646 0.0578 0.017 0.17 0.51 0.314432
P(y) 0.18 0.38 0.34 0.1 1 1.64 0.8104 0.900222

Mean of Y 0 0.38 0.68 0.3 1.36

Var of Y 0.332928 0.049248 0.139264 0.26896 0.7904
StDev of Y 0.889044

4.83
See table above. Number of total complaints (food complaints + service complaints) has a
mean of (1.36 + 1.64) = 3.00. If the two types of complaints are independent, then the
variance of total complaints is equal to the sum of the variance of the two types of
complaints because the covariance would be zero. (.8104 + .7904) = 1.6008. The standard
deviation will be the square root of the variance = 1.26523.

If the number of food and service complaints are not independent of each other, then the
covariance would no longer be zero. The mean would remain the same; however, the
standard deviation would change. The variance of the sum of the two types of complaints
becomes the variance of one plus the variance of the other plus two times the covariance.

4.84
Y Small
Mean StDev of
X Large 0 1 2 3 4 P(x) of X Var of X X
0 0.0144 0.0208 0.0288 0.0104 0.0056 0.08 0 0.453152
1 0.0288 0.0416 0.0576 0.0208 0.0112 0.16 0.16 0.304704
2 0.0504 0.0728 0.1008 0.0364 0.0196 0.28 0.56 0.040432
3 0.0576 0.0832 0.1152 0.0416 0.0224 0.32 0.96 0.123008
4 0.018 0.026 0.036 0.013 0.007 0.1 0.4 0.26244
5 0.0108 0.0156 0.0216 0.0078 0.0042 0.06 0.3 0.411864
P(y) 0.18 0.26 0.36 0.13 0.07 1 2.38 1.5956 1.263171

Mean of Y 0 0.26 0.72 0.39 0.28 1.65

Var of Y 0.49005 0.10985 0.0441 0.23693 0.38658 1.2675
StDev of Y 1.12583302

 5 x  10 y = 5(2.38) + 10(1.65) = 28.4

  (52 ) x 2  (102 ) y 2  25(1.5965)  100(1.2675) = 12.91

4.85
a. No, not necessarily. There is a probability distribution associated with the
rates of return in the mutual fund and not all rates of return will equal the

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Chapter 4: Discrete Probability Distributions 4-39

expected value.
b. Which fund to invest in will depend not only on the expected value of the
return but also on the
riskiness of each fund and how risk averse the client is.

4.86
Days P(x) F(x) Mean Variance
1 0.05 0.05 0.05 0.242
2 0.2 0.25 0.4 0.288
3 0.35 0.60 1.05 0.014
4 0.3 0.90 1.2 0.192
5 0.1 1.00 0.5 0.324
Ex 4.86 1.00 3.2 1.06
S.D. 1.029563
a. P(X < 3) = .05+ .20 = .25
b. E(X) = 3.2 days
c.  = 1.029563 days
d. Cost = $20,000 + $2,000X
E(Cost) = $20,000 + $2,000E(X) = $26,400,
standard deviation = ($2,000)(1.029563) = $2,059.13
e. The probability of a project taking at least 4 days to complete is .30 + .10 = .4.
Given independence of the individual projects, the probability that at least two of
three projects will take at least 4 days to complete is a binomial random variable with
n = 3, p = .4. P(2) + P(3) = 3(.4)2(.6) + (1)(.4)3(1) = .352

4.87
Cars P(x) F(x) Mean Variance
0 0.1 0.10 0 0.48841
1 0.2 0.30 0.2 0.29282
2 0.35 0.65 0.7 0.015435
3 0.16 0.81 0.48 0.099856
4 0.12 0.93 0.48 0.384492
5 0.07 1.00 0.35 0.544887
Ex 4.87 1.00 2.21 1.8259
S.D. 1.351259

a. E(X) = 2.21 cars sold

b. Standard deviation = 1.3513 cars
c. Mean Salary = $250 + $300 (2.21) = $913.
Standard deviation of salary = $300(1.3513) = $405.39
d. To earn a salary of $1,000 or more, the salesperson must sell at least 3 cars.
P(X  3) = .16 + .12 + .07 = .35
4.88 a.  = np = 9(.25) = 2.25
b.   np (1  p ) = 9(.25)(.75) = 1.299
c. (i) E(X) = 1 + 2.25 = 3.25, (ii)  = 1.299

4.89 a. Positive covariance: Consumption expenditures & Disposable income

b. Negative covariance: Price of cars and the number of cars sold

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4-40 Statistics for Business & Economics, 8th edition

c. Zero covariance: Dow Jones stock market average & rainfall in Brazil

4.90 a. P(4) = (.95)(.90)(.90)(.80) = .6156

P(3) = (.05)(.90)(.90)(.8) + 2(.95)(.10)(.90)(.80) + (.95)(.90)(90)(.20) = .3231
P(2) = 2(.95)(.90)(.10)(.2) + 2(.05)(.90)(.10)(.80) + (.05)(.90)(.90)(.2) + (.95)
(.10)(.10)(.8) = .0571
P(1) = (.95)(.10)(.10)(.2) + 2(.05)(.90)(.10)(.20) + (.05)(.10)(.10)(.8) = .0041
P(0) = (.05)(.10)(.10)(.20) = .0001

b. E(X) = .0041 + 2(.0571) + 3(.3231) + 4(.6156) = 3.55 vehicles

c.  x P ( x) 12.99 ,  x  12.99  (3.55) 2 .6225 vehicles
2

4.91

X Years
Mean StDev of
Y Visits 1 2 3 4 P(y) of Y Var of Y Y
0 0.07 0.05 0.03 0.02 0.17 0 0.2057
1 0.13 0.11 0.17 0.15 0.56 0.56 0.0056
2 0.04 0.04 0.09 0.1 0.27 0.54 0.2187
P(x) 0.24 0.2 0.29 0.27 1 1.1 0.43 0.6557439

Mean of X 0.24 0.4 0.87 1.08 2.59

Var of X 0.606744 0.0696 0.048749 0.5368 1.2619
StDev of X 1.12334

xyP(x,y) 0.21 0.38 1.05 1.4 3.04

Cov(x,y)=
∑∑xyP(x,y)-μxμy 0.191

a. Py(0) = .07+.05+.03+.02 = .17

b. E(X) =  x .24  2(.2)  3(.29)  4(.27) 2.59
E(Y) =  y .56  2(.27) 1.1
c. E(XY) = 3.04, Cov(X,Y) = 3.04 – (2.59)(1.1) = .191. This implies that there is a
positive relationship between the number of years in school and the number of
visits to a museum in the last year.

4.92 Assume that the shots are independent of each other

 6  6
P(X  2) = 1 – P(X  1) = 1 – [   (.4) (.6)    (.4)(.6) ] = 0.767
0 6 5
a.
0
  1
 
 6 3 3
b. P(X = 3) =   (.4) (.6) = 0.2765
3
 
c.  np = (6)(.4) = 2.4,   6(.4)(.6) = 1.2
d. Mean of total points scored = 3() = 3(2.4) = 7.2,
Std dev = 3 = 3(1.2) = 3.6

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Chapter 4: Discrete Probability Distributions 4-41

 5 3 2
4.93 a. P(X = 3) =   .55 .45 = .3369
 3
b. P(X  3) = P(3)+P(4)+P(5) = .3369 + (5)(.55)4(.45) + (1)(.55)5(1) = .5931
c.  np = (80)(.55) = 44 will graduate in 4 years. The proportion is 44/80 = .55.
  80(.55)(.45) = 4.4497. The proportion is 4.4497/80 = .05562

4.94 a. This is a binomial probability (assuming independence) with a p = .6 and n = 7.

 7  7
Then the P(A wins) = P(X ≥ 4) =   (.6) (.4)    (.6) (.4)  7(.6 )(.4)  (.6) =
4 3 5 2 6 7

 4 5
0.71021
 6 3 3
b.   (.6) (.4) = 0.27648
3
 
c. (i) The outcome of the first four games are known with certainty. Therefore, the
series is a best out of three games. To compute the probability that team A wins,
find P(X  2) = 3(.6)2(.4) + (.6)3 = 0.648,
 2
(ii)   (.6)(.4) = 0.48
1 

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4-42 Statistics for Business & Economics, 8th edition

4.95 To evaluate the effectiveness of the analyst’s ability, find the probability that x is
greater than or equal to 3 at random.
 5   10   5   10   5   10 
 3  2   4  1   5  0 
          
P(X  3) = = .16683
 15   15   15 
5  5  5 
     

C04C416  C14C316 1820  2240

4.96 P(X  2) = 1 – 20
1  = .16202
C4 4845

4.97
a. 0.75 ( 1- 0.2514)
b. ( 0.10-0.12 / 0.3 = -0.67, in the z table = 0.2514)
c. 0.10-0.18 / 0.3 =

4.98 P(X > 2) = 1 – e-6.5 – e-6.5(6.5) – e-6.5 (6.5)2/2! = 0.95696

4.99
a. = .0302
b. = .3033
c. =.2746

4.100
The mean and variance for the total value of the stock portfolio:

Exercise_4.100 X_4.100
Y_4.100 40 50 60 70 P(y) Mean of Y Var of Y StDev of Y
45 0 0 0.05 0.2 0.25 11.25 17.01563
50 0.05 0 0.05 0.1 0.2 10 2.1125
55 0.1 0.05 0 0.05 0.2 11 0.6125
60 0.2 0.1 0.05 0 0.35 21 15.94688
P(x) 0.35 0.15 0.15 0.35 1 53.25 35.6875 5.973902

Mean of X 14 7.5 9 24.5 55

Var of X 78.75 3.75 3.75 78.75 165
StDev of X 12.84523

xyP(x,y) 800 437.5 465 1172.5 2875

Cov(x,y) =

∑∑xyP(x,y)-μxμy -53.75

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Chapter 4: Discrete Probability Distributions 4-43

The mean and variance for the linear function W = aX + bY.

W a  x  b y = (10)55 + (5)53.25 = $816.25

 W2 a 2 x2  b 2 y2  2abCov ( x, y ) 102 (165)  52 (35.6875)  2(10)(5)(  53.75) $12017.1875

4.101
The mean and variance of the trade balance:
Exercise_4.101 X_4.101
Y_4.101 3 4 5 P(y) Mean of Y Var of Y StDev of Y
4 0.1 0.15 0.05 0.3 1.2 1.2
6 0.1 0.2 0.1 0.4 2.4 3.15544E-31
8 0.05 0.15 0.1 0.3 2.4 1.2

P(x) 0.25 0.5 0.25 1 6 2.4 1.549193

Mean of X 0.75 2 1.25 4

Var of X 0.25 0 0.25 0.5
StDev of X 0.707107

xyP(x,y) 4.2 12 8 24.2

Cov(x,y) =

∑∑xyP(x,y)-μxμy 0.2

The mean and variance for the linear function W = aX – bY.

W a  x  b y = (10)4 – (5)6 = 10

 W2 a 2 x2  b 2 y2  2abCov ( x, y ) 102 (0.5)  (  5) 2 (2.4)  2(10)(  5)(0.2) 90

Therefore, the mean of the trade balance is $10,000. The variance of the trade balance
is $90,000.

4.102
a. Use the Poisson probability distribution because the random variable is the number of
occurrences of a certain event (delivery failures) in a given continuous interval (one day).

b. First, use the given data to determine an estimate for  , the expected number of
failures per day.

15  10  ...  8  11
 10.75
20

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4-44 Statistics for Business & Economics, 8th edition

Cumulative Distribution Function

Poisson with mu = 10.7500

x P( X <= x)
1.00 0.0003
2.00 0.0015
3.00 0.0059
4.00 0.0179
5.00 0.0435
6.00 0.0895
7.00 0.1601
8.00 0.2549
9.00 0.3682
10.00 0.4900

P( X 10) 1  P( X 9) 1  0.3682 0.6318

c. Cumulative Distribution Function

Poisson with mu = 10.7500

x P( X <= x)
1.00 0.0003
2.00 0.0015
3.00 0.0059
4.00 0.0179
5.00 0.0435
6.00 0.0895
7.00 0.1601
8.00 0.2549
9.00 0.3682
10.00 0.4900

P ( X  6)  P ( X 5) 0.0435

d. Cumulative Distribution Function

Poisson with mu = 10.7500

x P( X <= x)
1.00 0.0003
2.00 0.0015
3.00 0.0059
4.00 0.0179
5.00 0.0435
6.00 0.0895
7.00 0.1601
8.00 0.2549
9.00 0.3682
10.00 0.4900
11.00 0.6091
12.00 0.7157
13.00 0.8039
14.00 0.8716
15.00 0.9201
16.00 0.9527
17.00 0.9733
18.00 0.9857
19.00 0.9926
20.00 0.9964

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Chapter 4: Discrete Probability Distributions 4-45

Use the cumulative distribution function table to construct a table of probabilities for P ( X  x ) .

x P( X  x)
0 1.0000
1 0.9997
2 0.9985
3 0.9941
4 0.9821
5 0.9565
6 0.9105
7 0.8399
8 0.7451
9 0.6318
10 0.5100
11 0.3909
12 0.2843
13 0.1961
14 0.1284
15 0.0799
16 0.0473
17 0.0267
18 0.0143
19 0.0074
20 0.0036

Note that P ( X  14) is greater than 10%, but P ( X  15) is less than 10%. Thus, the number of
failures such that the probability of exceeding this number is 10% or less is 15.

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4-46 Statistics for Business & Economics, 8th edition

4.103

a. Shown below is the cumulative distribution function for a Poisson distribution with
 19.5.

Cumulative Distribution Function

Poisson with mu = 19.5000

x P( X <= x)
0.00 0.0000
1.00 0.0000
2.00 0.0000
3.00 0.0000
4.00 0.0000
5.00 0.0001
6.00 0.0004
7.00 0.0011
8.00 0.0028
9.00 0.0067
10.00 0.0141
11.00 0.0273
12.00 0.0488
13.00 0.0809
14.00 0.1257
15.00 0.1840
16.00 0.2550
17.00 0.3364
18.00 0.4246
19.00 0.5151
20.00 0.6034
21.00 0.6854
22.00 0.7580
23.00 0.8196
24.00 0.8697
25.00 0.9087
26.00 0.9380
27.00 0.9591
28.00 0.9739
29.00 0.9838
30.00 0.9902

The cumulative distribution function shows that there is a 90.87% chance that there are 25
applications or fewer. Thus, assuming a five-day work week, 25/5 = 5 analysts should be hired.

b. P( 2 of the 5 analysts have no clients ) P(3 of 5 have at least 1 client )

In this case, there will be a minimum of 11 clients (5 for the first 2 analysts and 1 for the third
analyst) and a maximum of 15 clients (5 for each of the first 3 analysts).

P(11  X 15) P( X 15)  P( X 10) 0.1840  0.0141 0.1699

c. The probability that customers would cancel given that 4 analysts are hired is the probability
that there are more applications than the analysts could complete (4 5 20).
P ( X  20) 1  P( X 20) 1  0.6034 0.3966

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Chapter 4: Discrete Probability Distributions 4-47

d. P(2 of the 4 analysts have no clients ) P(2 of 4 have at least 1 client )

In this case, there will be a minimum of 6 clients (5 for the first analyst and 1 for the second
analyst) and a maximum of 10 clients (5 for each of the first 2 analysts).

P(6  X 10) P( X 10)  P( X 5) 0.0141  0.0001 0.014

4.104

a. Probability distribution with n = 20 and p = 1 – .2 = .8.

Cumulative Distribution Function

Binomial with n = 20 and p = 0.8

x P( X <= x )
0 0.0000
1 0.0000
2 0.0000
3 0.0000
4 0.0000
5 0.0000
6 0.0000
7 0.0000
8 0.0001
9 0.0006
10 0.0026
11 0.0100
12 0.0321
13 0.0867
14 0.1958
15 0.3704
16 0.5886
17 0.7939
18 0.9308
19 0.9885
20 1.0000

P(X ≥ 17) = 1 – P(X ≤ 16) = 1 –.5886 = .4114

b. P(X ≥ 19) = 1 – P(X ≤ 18) = 1 –.9308 = .0692

c. Probability distribution with n = 20 and p = 1 – .15 = .85.

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4-48 Statistics for Business & Economics, 8th edition

Cumulative Distribution Function

Binomial with n = 20 and p = 0.85

x P( X <= x )
0 0.0000
1 0.0000
2 0.0000
3 0.0000
4 0.0000
5 0.0000
6 0.0000
7 0.0000
8 0.0000
9 0.0000
10 0.0002
11 0.0013
12 0.0059
13 0.0219
14 0.0673
15 0.1702
16 0.3523
17 0.5951
18 0.8244
19 0.9612
20 1.0000

P(X ≥ 17) = 1 – P(X ≤ 16) = 1 –.3523 = .6477

d. P(X ≥ 19) = 1 – P(X ≤ 18) = 1 –.8244 = .1756

4.105
a. n = 100; p = .5

Using the Poisson approximation to the binomial distribution,

λ = 100 × .5 = 50

Using the cumulative distribution function, P(X ≤ 62) = .9576.

Therefore, more than 62 positive responses from the sample of 100 are required such that
the probability of 50% or more voters supporting the candidate for the Mayor is 0.95 or
more.

b. The responses of the voters in the sample are independent of each other.

c. n = 400; p = .5

Using the Poisson approximation to the binomial distribution,

λ = 400 × .5 = 200

More than 224 positive responses from the sample of 400 are required such that the
probability of 50% or more voters supporting the candidate for the Mayor is 0.95 or
more.

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Chapter 4: Discrete Probability Distributions 4-49

4.106
n = 1,000,000;
99.999% of the computers produced will perform exactly as promised in the
descriptive literature. Therefore, p = 1 – 0.99999 = .00001.

Using the Poisson approximation to the binomial distribution,

λ = 1,000,000 × .00001 = 10

Cumulative Distribution Function

Poisson with mu = 10.0000

x P( X <= x )
0.00 0.0000
1.00 0.0005
2.00 0.0028
3.00 0.0103
4.00 0.0293
5.00 0.0671
6.00 0.1301
7.00 0.2202
8.00 0.3328
9.00 0.4579
10.00 0.5830
11.00 0.6968
12.00 0.7916
13.00 0.8645
14.00 0.9165
15.00 0.9513
16.00 0.9730
17.00 0.9857

a. P(X < 5) = P(X  4) = .0293.

The probability of 100% computers produced will perform exactly as promised in the
descriptive literature is 0.0293, which is very less.
b. P(X > 15) = 1 – P(X  15) = 1 – .9513 = .0487. The probability of 99.999%
computers produced will perform exactly as promised in the descriptive literature is
1– 0.0487 = 0.9513.

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