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=0
This makes sense since we have a symmetric PMF centered around 0.
1
Liz Kantor Problem Set 3 2
Question 2. The probability that a cellular phone company kiosk sells x number of new
phone contracts per day is shown below.
.2 |x=4
.25 | x = 5
.35 | x = 6
P (X = x) =
.10 | x = 8
.10 | x = 10
0 | otherwise
(a) Find the mean, variance, and standard deviation for this probability distribution.
(b) Suppose the kiosk salesperson makes $80/day, plus a $25 bonus for each new phone
contract sold. What are the mean and variance of the salesperson’s daily salary?
Proof.
We substitute this PMF into the equation, and we also substitute in our part (a)
calculation of E(X):
(b) Let S be a random variable representing the daily salary. We consider S for each
outcome of X. For example, if X = 4, the salesperson will receive $80 + $25(4) =
$180. This gives us a PMF for S:
.2 | x = $80 + $25(4) = $180
.25 | x = $80 + $25(5) = $205
.35 | x = $80 + $25(6) = $230
P (S = 80 + 25X = x) =
.10 | x = $80 + $25(8) = $280
.10 | x = $80 + $25(10) = $330
0 | otherwise
We can also calculate the PMF for S 2 by considering what S 2 becomes in each of
the above cases:
.2 | x = ($180)2 = $2 32, 400
.25 | x = ($205)2 = $2 42, 025
.35 | x = ($230)2 = $2 52, 900
P (S 2 = x) =
.10 | x = ($280)2 = $2 78, 400
.10 | x = ($330)2 = $2 108, 900
0 | otherwise
Proof.
(a)
X
E(X) = xP (X = x) = 0P (X = 0) + 1P (X = 1) + 2P (X = 2) = .5 + 2(.1) = .7
x
(b) First, we use the same technique used for problems (1) and (2) to find the PMF
of X 2 :
.4 | x = 02 = 0
.5 | x = 12 = 1
P (X 2 = x) =
.1 | x = 22 = 4
0 | otherwise
(a) What is the probability of two sixes? Of exactly one six? Of no sixes?
Proof. Let A be a random variable representing the result of the first die and B be a
random variable representing the result of the second die.
(a) For two sixes to occur, A = 6 and B = 6. Since the dice rolls are independent, we
have:
= P (A = 6, B 6= 6) + P (A 6= 6, B = 6) − P (A = 6, B 6= 6, A 6= 6, B = 6))
= P (A = 6, B 6= 6) + P (A 6= 6, B = 6) − 0
= P (A = 6, B 6= 6) + P (A 6= 6, B = 6)
For no sixes to occur, A 6= 6 and B 6= 6. Since the dice rolls are independent, we
have:
(b) Let X be a random variable representing the number of sixes rolled. By the
definition of expectation:
X
E(X) = xP (X = x)
x
= 0P (X = 0) + 1P (X = 1) + 2P (X = 2)
= 1(5/18) + 2(1/36)
= 1/3
Liz Kantor Problem Set 3 6
Question 6. If random variable X has mean µ and variance σ 2 , show (using the a + bX
rule) what the mean and variance of Z = (X − µ)/σ are.
2
Proof. The a + bX rule has two parts: µa+bX = a + bµX and σa+bX = b2 σX
2 . Simplifying
E(Z) = a + bµX
= (1/σ) − (µ/σ)(σ)
= (1/σ) − µ
V ar(Z) = b2 V ar(X)
= (−µ/σ)2 (σ 2 )
= µ2
Question 7. Find the variance of each of the following bets from the class notes. Which
bet is riskiest and which bet is safest?
(a) You get $5 with probability 1.
(b) You get $10 with probability .5, or $0 with probability .5.
(c) You get $5 with probability .5, $10 with probability .25, and $0 with probability
.25.
(d) You get $5 with probability .5, $105 with probability .25, or lose $95 with proba-
bility .25.
Proof. In each part, let X be a random variable representing winnings in dollars. We
can begin by observing that each part’s PMF is symmetric around X = 5, so each part’s
E(X) = 5 and each part’s (EX)2 = 25.
(a)
(
2 1 | x = 52 = 25
P (X = x) =
0 | otherwise
V ar(X) = E(X 2 ) − (EX)2
X
= xP (X 2 = x) − 25
x
= 25(1) − 25
=0
Liz Kantor Problem Set 3 7
(b)
2
.5 | x = 10 = 100
P (X 2 = x) = .5 | x = 02 = 0
0 | otherwise
(c)
.5 | x = 52 = 25
| x = 102 = 100
.25
P (X 2 = x) =
.25 | x = 02 = 0
0 | otherwise
V ar(X) = E(X 2 ) − (EX)2
X
= xP (X 2 = x) − 25
x
= 25(.5) + 100(.25) + 0(.25) − 25
= 12.5
(d)
.5 | x = 52 = 25
| x = 1052 = 11025
.25
P (X 2 = x) =
.25
| x = (−95)2 = 9025
0 | otherwise
V ar(X) = E(X 2 ) − (EX)2
X
= xP (X 2 = x) − 25
x
= 25(.5) + 11025(.25) + 9025(.25) − 25
= 5000
Bet (d) is the riskiest because it has the highest variance, and bet (a) is the safest
because it has the lowest variance.