Assignment #4 MGT 5006

1. Page 149, Point no 5

4.5 For each of the following, indicate whether the type of probability involved is an example of a priori

probability, empirical probability, or subjective probability.

a. The next toss of a fair coin will land on heads.

b. Italy will win soccer’s World Cup the next time the competition is held.

c. The sum of the faces of two dice will be seven.

d. The train taking a commuter to work will be more than 10 minutes late.

Solution: a. The total number of outcomes on a coin if we ignore the possibility of standing of coin on its edge

is either head or tales, the probability of coming a head on a coin toss is ½ = 50%, Therefore this is a priori

probability. The preceding examples use the a priori probability approach because the number of ways the

event occurs and the total number of possible outcomes are known from the composition of coin sides.

b. Italy will win soccer’s world cup is a subjective probability, the assignment of subjective probabilities to

various outcomes is usually based on a combination of an individual’s past experience, personal opinion, and

analysis of a particular situation. Subjective probability is especially useful in making decisions in situations in

which you cannot use a priori probability or empirical probability.

c. The probability of getting a seven on two dice is:

Total number of outcomes = 6x6 = 36

Possibilities of getting a seven is 6 i.e. 1+6, 2+5, 3+4, 4+3, 5+2, 1+6
Probability is 6/36 = 1/6

This is a example of priori probability.

d. This is Empirical probability. In the empirical probability approach, the probabilities are based on observed

data, not on prior knowledge of a process. Surveys are often used to generate empirical probabilities.

2. Page 150, Point no 10

4.10 How will marketers change their social media use in the near future? A survey by Social Media

Examiner reported that 77% of B2B marketers (marketers that focus primarily on attracting businesses) plan

to increase their use of LinkedIn, as compared to 54% of B2C marketers (marketers that primarily target

consumers). The survey was based on 1,184 B2B marketers and 1,703 B2C marketers. The following table

summarizes the results:

a. Give an example of a simple event.

b. Give an example of a joint event.

c. What is the complement of a marketer who plans to increase use of LinkedIn?

d. Why is a marketer who plans to increase use of LinkedIn and is a B2C marketer a joint event?

Solution: a.
The simple event is described by a single characteristic. In the above question, there are 4 simple events i.e.

1. Increase use of Linked In – Yes

2. Increase use of Linked In – No

3. B2B marketer

4. B2C Marketer

b. A joint event is an event that has two or more characteristics. In the given scenario A Joint even would be

that a B2B marketer will increase use of Linked In. There are four joint events:

1. A B2B marketer will increase use of Linked In

2. A B2B marketer will not increase use of Linked In

3. A B2C marketer will increase use of Linked In

4. A B2C marketer will not increase use of Linked In

c. The total number of marketers are 2,887 out of which 1,832 plans to increase use of Linked In and 1,055 do

not plan to increase use of Linked In.

The probability that a marketer plan to increase use of Linked In

1,832/2,887 = 0.6345687 i.e 63.45%

d. A marketer who wants to increase use of Linked In and is a B2C marketer because in a joint event there are

more than one characteristic. The first characteristic is whether a marketer wants to increase use of Linked In

or not the other characteristic is that the marketer is a B2C or B2B. Hence it is a joint event.
3. Page 156, Point no 18,19,20

4.18 If P(A and B) = 0.4 and P(B) = 0.8, find P(A/B2).

Solution: Using general multiplication rule

P(A/B) = 0.4/0.8 = 0.8

4.19 If P(A) = 0.7, P(B) = 0.6, and A and B are independent, find P(A and B).

Solution: If A and B are independent then

P(A and B) = P(A)P(B)

P(A and B) = (0.7) (0.6) = 0.42

4.20 If P(A) = 0.3, P(B) = 0.4, and P (A and B2) = 0.2, are A and B independent?

Solution: If A and B are independent then,

1. Events A and B are independent if, and only if, P(A/B) = P(A).

2. Events A and B are independent if, and only if, P(A and B2) = P(A)P(B).

In above if P(A and B) = 0.2

But if A and B are independent then P(A and B) = P(A) P(B) = (0.3) (0.4) = 0.12 but here P(A and B) is 0.2,

hence A and B are not independent in the above case.

4. Page 158, Point no 28

4.28 A standard deck of cards is being used to play a game. There are four suits (hearts, diamonds, clubs,

and spades), each having 13 faces (ace, 2, 3, 4, 5, 6, 7, 8, 9, 10, jack, queen, and king), making a total of

52 cards. This complete deck is thoroughly mixed, and you will receive the first 2 cards from the deck,

without replacement (the first card is not returned to the deck after it is selected).

a. What is the probability that both cards are queens?

c. If you were sampling with replacement (the first card is returned to the deck after it is selected), what

would be the answer in (a)?

d. In the game of blackjack, the face cards (jack, queen, king) count as 10 points, and the ace counts as

either 1 or 11 points. All other cards are counted at their face value. Blackjack is achieved if 2 cards total

21 points. What is the probability of getting blackjack in this problem?

Solution. A.

Total number of cards = 52 cards

Total number of queens = 4

Probability of getting one queen = 4/52 = 1/13

P (Both cards are queens) without replacement = 4/52 x 3/51 = 12/2652 = 0.0045

b. The probability that the first card would be 10 = 4/52 = 1/13

The probability that a card would be a 5 or 6 = 8/52

The probability that first card is 10 and other be a 5 or 6 = 4/52 x 8/51 = 32/2652 = 0.012066

c. If the first card taken out is returned to deck then there will be always 52 cards in deck even after first

draw.

P(Both cards are queens) with replacement = 4/52 x 4/52 = 16/2652 = 0.0059

d. A Blackjack is achieved when the total of 2 cards is 21. The number of possibilities of two card total to

be 21 is as follows:

1. One Jack and One ace (when count if Ace is 11 points)

2. One queen and one ace (when count if Ace is 11 points)

3. One Kind and one ace (when count if Ace is 11 points)

4. One card of 10 and one ace (when count if Ace is 11 points)

The possibilities are doubled when cards are taken without replacement

P(blackjack) = 2 x [P(1 Jack and 1 ace) + P(1 queen and 1 ace) + P(1 King and 1 ace) + P(10 and 1 ace)]
2 x [ 4/52 x 4/52 x 4/52 x 4/52 x 4/52 x 4/52 x 4/52 x 4/52] = 2 x (0.2367) = 0.0483

5. Page 163, Point no 38

4.38 Sustainable Brand Index takes a closer look at today’s sustainable consumers based on how

consumers act in different situations and the underlying structures in their attitudes. Sustainable Brand

Index has identified four behaviors that consumers show in relation to sustainability and brands: Ego, do

not care about sustainability; Moderate, believe that sustainability can be a bit interesting; Smart, curious

about as well as interested in sustainability; and Dedicated, zealous and well-prepared regarding

sustainability. Suppose a sample of 200 consumers, 100 males and 100 females, were categorized into the

consumer behavioral groups with the following results:

If a consumer is selected at random, what is the probability that he or she

a. is classified as smart?

b. is classified as smart or dedicated?

c. is a male or is classified as moderate?

d. is a male and is classified as moderate?

e. Given that the consumer selected is a female, what is the probability that she is classified as ego?

Solution.

a. If a consumer is selected as random, total number of consumers = 200

P(Smart) = 28/200 = 0.14

b. If a consumer is selected as random, total number of consumers = 200

Total number of smart consumers = 28

Total number of dedicated consumers = 10

The events are mutually exclusive and independent.

P (Smart or dedicated) = 38/200 = 0.19

c. Total number of male consumers = 100

Total number of moderate consumers = 98

Total number of moderate male consumers = 45

The events are not mutually exclusive and are not independent.

P (A or B) = P(A) + P(B) – P (A and B)

P(Male) = 100/200

P (Moderate) = 98/200

P (Male or Moderate) = 100/200 + 98/200 – 45/200 = 153/200 = 0.765

d. P (Male and Moderate) = 45/200 = 0.225

e. Total number of females = 100

Total number of Ego female = 29

P (Ego) = 29/100 = 0.29