Department of Management, UTSC

ECMB11H3Y Quantitative Methods in Economics I L01

Lecture 03 - In Class Exercise Summer 2012
Problem 1

The Energy Information Administration in the US reported the mean retail price per gallon of regular gasoline
was $2.30 in 2006. Suppose the standard deviation was $0.10.
(a) What can you say about the % of regular gas sold between $2.10 and $2.50 per gallon?

(b) How about between $2.15 and $2.52?

(c) What can you say about the % of regular gas sold between $2.10 and $2.50 per gallon if the price of gas has

a bell shaped distribution?

(d) What can you say about the % of regular gas sold between $2.20 and $2.50 per gallon if the price of gas has

a bell shaped distribution?

Problem 2
(a) Consider the Tim Horton case (02Lecture-case.pdf). Using Excels Data Analysis Descriptive
Statistics tool on question 1 data set of 30 customers (03Lecture-case.xlsx) you get the following output. Do
you feel that Store Managers are doing their job in enforcing the 20min rule?
Time Spent at Tim Hortons
Mean
Standard Error
Median
Mode
Standard Deviation
Sample Variance
Kurtosis
Skewness
Range
Minimum
Maximum
Sum
Count

18.73333333
1.994206167
17.5
7
10.92271702
119.3057471
0.249112574
0.725353099
44
3
47
562
30

(b) Answer Question 2 in Tim Horton case study.

(c) Consider the Tim Horton case study question 1 but suppose there is an additional data point that is 55 minutes, it is an
outlier?
Column1
Mean
Standard Error
Median
Mode
Standard Deviation
Sample Variance
Kurtosis
Skewness
Range
Minimum
Maximum

19.87096774
2.25843315
18
7
12.57442361
158.116129
0.970853597
1.021467359
52
3
55

Sum
Count

616
31

Problem 3
Given 5 equally likely outcomes O1, O2, O3, O4, O5 and events A = {O1, O2}, B = {O3, O4}, C = {O2, O3, O4}
(a) Find P[A], P{B], P[C]

(b) Find P[ A U B]. Are A and B mutually exclusive?

(c) Find P[ AC].

(d) Find P[ A U BC].

Problem 4
Given P[A] = 0.3, P[B] = 0.4, P[A B] = 0.2 find P[ AC (A U B)].

Problem 5
You go to a casino and there is a game where the dealer rolls a pair of dice. You bet that the total rolled is 6, what is
probability of you winning?

Problem 6
The project approval process in a certain corporation follows the circuit pictured below. If manager a approves, the
project is approved irregardless of what the other mangers do. If manager a does not approve the project, but manager
b approves the project, then it forwarded to both managers c and d. If either c or d approves, then the project is
a go. Suppose that each manager has a probability p = 0.7 of approving the project and that everyone comes to the
decision independently, what is the probability that a project will be approved in the corporation (8 marks)

Let outcome a = manager a approves, A = manager a not approve. Same goes for b,c,d.
Probability manager approves = p and not approve = p (1 p ) . Circle all events lead to project not getting approve.
0 approve
1 approve
2 approve
3 approve
4 approve

abcd
Abcd
ABcd
ABCd
ABCD

aBcd
AbCd
ABcD

abCd
AbcD
AbCD

abcD
aBCd
aBCD

aBcD

abCD

Problem 6
7

There are 50 workers in a small company. 5 workers completed work late. 6 workers made defective parts. 2
workers were late and made defective parts.
(a) What is probability that a worker is late in this company?

(b) What is probability that a worker made defective parts in this company?

(c) If there were 100 workers in this company, how many would either be late or made defective parts or both?

(d) Are the events late and made defective parts mutually exclusive?