Assignment # 2 (BS-Eco2K11)

1. Which of the following are continuous variables and which are discrete?
a. Speed of an airplane
b. Age of a college professor chosen at random
c. Number of books in a college bookstore
d. Weight of a football player chosen at random
e. Number of lightning strikes in Rocky Mountain National Park on a given
day
2. Consider each distribution. Determine if it is valid probability distribution or not,
and explain your answer.
a.
X
0
1
2
P(X)
0.25
0.60
0.15
b.
X
0
1
2
P(X)
0.25
0.60
0.20
3. What is the age distribution of promotion sensitive shoppers? A super market
super shopper is defined as a shopper for whom at least 70% of the items
purchased were on sale or purchased with a coupon. The following table is based
on the information taken from Trends in the United States (Food Marketing
Institute, Washington D.C.)
Age Range, Years

18-28

29-39

40-50

51-61

Midpoint x
Percent of super
shoppers

23
7%

34
44%

45
24%

56
14%

62 and
over
67
11%

For the 62 and over group use the midpoint 67 years.

a. Using the age midpoints x and the percentage of super shoppers, do we
have a valid probability distribution? Explain.
b. Use a histogram to graph the probability of part (a)
c. Compute the expected age u of a super shopper.
d. Compute the standard deviation rho for ages of super shoppers.
4. The following data are based on information taken from the statistical abstract of
the United States. In this table, x= size of Family. Percentage data are the
percentages of U.S family of this size.
X
%

2
42%

3
23%

4
21%

5
10%

6
3%

7 or more
1%

a. Convert the percentage data to probabilities and make a histogram of the

probability distribution for family size.
b. What is the probability that a family selected at random will have only two
members?

5.

6.

7.

8.

c. What is the probability that a family selected at random will have more
than three members?
d. Compute u, the expected family size (round families of size 7 or more to
size 7)
e. Compute rho, the standard deviation (round families of size 7 or more to
size 7)
The college hiking club is having a fund raiser to buy new equipment for fall and
winter outings. The club is selling Chinese fortune cookies at a price of $1 per
cookie. Each cookie contains a piece of paper with a different number written on
it. A random drawing will determine which number is the winner of a dinner for
two at a local Chinese restaurant. The dinner is valued at $35. Since the fortune
cookies were donated to the club, we can ignore the cost of the cookies. The
club sold 719 cookies before the drawing.
a. Lisa bought 15 cookies. What is the probability she will win the dinner for
two? What is the probability she will not win?
b. Lisas expected earnings can be found by multiplying the value of the
dinner by the probability that she will win. What are Lisas expected
earnings? How much did she effectively contribute to the hiking club?
Trevor is interested in purchasing the local hardware/sporting goods store in the
small town of Dove Creek, Montana. After examining accounting records for the
past several years, he found that the store has been grossing over $850 per day
about 60% of the business days it is open. Estimate the probability the store will
gross over $850
a. At least 3 out of 5 business days
b. At least 6 out of 10 business days
c. Less than 5 out of 10 business days
d. Less than 6 out of next 20 business days. If this actually happened, might
it shake a persons confidence in the statement p = 0.60? Might it make a
person suspect that p is less than 0.60? Explain.
e. More than 17 out of the next 20 business days. If this actually happened,
might a person suspect that p is greater than 0.60? Explain.
Does crime pay? The FBI Standard Survey of Crimes showed that for about 80%
of all property crimes (burglary, larceny, car theft, etc.), the criminals are never
found and the case is never solved. Suppose that a neighborhood district in a
large city has repeated property crimes, not always by the same criminals. The
police are investigating six property crime cases in this district.
a. What is the probability that none of the crimes will ever be solved?
b. What is the probability that at least one crime will be solved?
c. What is the expected number of crimes that will be solved? What is the
standard deviation?
The Denver Post reported that a large shopping center had an incident of
shoplifting (that was caught by security) on the average of once every three
hours. The shopping center is open from 10am to 9pm (11 hours). Let r be the
number of shoplifting incidents caught by security in an 11-hour period during
which the center is open.

a. Explain why the Poisson probability distribution would be a good choice

for the random variable r? What is ?
b. What is the probability that from 10am to 9pm there will be at least one
shoplifting incident caught by security?
c. Which is the probability that from 10am to 9pm there will be at least 3
shoplifting incidents caught by security?
d. What is the probability that from 10am to 9pm there will be no shoplifting
incidents caught by security?
9. Jim is a real estate agent who sells large commercial buildings. Because his
commission is so large on a single sale, he does not need to sell many buildings
to make a good living. History shows that Jim has a record of selling an average
of 8 large commercial buildings in 275 days.
a. Explain why Poisson probability distribution would be a choice for
r=number of buildings sold in a given time interval.
b. In a 60 days period, what is the probability that Jim will make no sales?
One sale? Two or more sales?
c. In a 90 day period, what is the probability that Jim will make no sales? One
sale? Two or more sales?

NOTE:

The assignment is to be done in groups of 3.

Deadline for the Assignment is March 29, 2013, to be submitted latest by 04:00 pm. Late
entries shall not be entertained
The assignments are to be submitted to Mr. Afzal (CIL office on first floor).