Due 11:59pm (midnight), Tuesday, 1/31

Homework 2
Last Name: First Name:

Directions: Please type in your answer in bold font. For the questions which require using formula
to calculate, please show your calculations.

1. (Ch.2) The following table gives the joint probability distribution between employment status
and college graduation among those either employed or looking for work (unemployed) in the
working age US population, based on 2008 Census data.

Joint distribution of Employment Status and College Graduation in the

US population Aged 25-64, 2008
Unemployed (Y=0) Employed (Y=1) Total
Non-College grads (X=0) 0.037 0.622 0.659
College grads (X=1) 0.009 0.332 0.341
Total 0.046 0.954 1

a. This table shows joint probability distribution and marginal probability distribution. Write
down the joint probabilities (e.g. Pr(X=0, Y=0) = 0.037) and the marginal probabilities (e.g.
Pr(X=0) = 0.659).
Answer:

b. Compute and interpret the expected value E(Y).

Answer:
0*.046+1*.954=.954
c. Compute and interpret the conditional means E(Y|X =1) and E(Y|X=0).
Answer:

d. Explain how E(Y) differs from E(Y|X=0).

Answer:

e. A randomly selected member of this population reports being unemployed. What is the
probability that this worker is a college graduate? A non-college graduate?
Answer:

1
2. (Ch. 2) X and Y are discrete random variables with the following joint distribution:
Probability
Value of Y
Distribution of X
14 22 30 40 65
1 0.02 0.05 0.1 0.03 0.01 .21
Value
5 0.17 0.15 0.05 0.02 0.01 .4
of X
8 0.02 0.03 0.15 0.1 0.09 .39
Probability
distribution of .21 .23 .3 .15 .11 .1
Y
That is Pr(X=1, y=14) = 0.02, and so forth.

P(Y=14) =P (X=1, Y=14) + P (X=5, Y=14) + P (X=8, Y=14)

=.02+.17+.02= .21

P(Y=22) =P (X=1, Y=22) + P (X=5, Y=22) + P (X=8, Y=22)

=.05+.15+.03=.23

P(Y=30) =P (X=1, Y=30) + P (X=5, Y=30) + P (X=8, Y=30)

=.1+.05+.15=.3

P(Y=40) =P (X=1, Y=40) + P (X=5, Y=40) + P (X=8, Y=40)

=.03+.02+.1=.15

P(Y=65) =P (X=1, Y=65) + P (X=5, Y=65) + P (X=8, Y=65)

.01+.01+.09=.11

a. Calculate the probability distribution by filling out the blank cells in above table.
Answer:
Y P(Y) YP(Y) Y^2*P(Y)
14 0.21 2.94 41.16
22 0.23 5.06 111.32
30 0.3 9 270
40 0.15 6 240
65 0.11 7.15 464.75
Total 30.15 1127.23

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 b. Calculate mean and variance of Y.
Answer:
E(Y)=yiP(Y=yj)

E(Y)=14*.21+22*.23+30*.3+40*.15+65*.11=30.15
E(Y)= yP(y)=30.15
Var(Y)= y^2 P(y) [ yP(y)]^2 = 1127.33-30.15^2= 218.2075

c. Calculate the probability distribution of Y given X = 8 by filling out blank cells in below
table.
Value of Y
14 22 30 40 65
Pr(Y|X=8) .02 .03 .15 .1 .09
P(Y=yX=8
.051 .076 .384 .256 .230
P(Y=y,X=8/P(X=8)

Total = 1

d. Calculate mean and variance of Y given X = 8.

Answer:

y P(Y=y,X=8) P(Y=y,X=8) Y*P(Y=y,X=8)

Ysqu.2
14 .02 .051282051 .717948718 10.05128205
22 .03 .076923077 1.692307692 37.23076923
30 .15 .384615385 11.53846154 346.1538462
40 .1 .256410256 10.25641026 410.2564103
65 .09 .230769231 15 975
Total 1 1 39.20512821 1778.692308

E(Y=y,X=8)=39.205.1
Var(Y=y,X=8)=y2P(Y=y,X=8)[yP(Y=y,X=8)]2=241.6502301

e. Calculate the covariance and correlation between X and Y.

Answer:
x P(x) XP(X) x2P(X)
1 .21 .21 .21
5 .4 2 10
8 .39 3.12 24.96
Total 5.33 35.17
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E(X)= xP(x)=5.33
Var(X)=x2P(x)-[xP(x)]2=35.17-5.332=6.7611

x y P(X=x,Y=y) XYP(X=x, Y=y)

1 14 .02 .28
1 22 .05 1.1
1 30 .1 3
1 40 .03 1.2
1 65 .01 .65
5 14 .17 11.9
5 22 .15 16.5
5 30 .05 7.5
5 40 .02 4
5 65 .01 3.25
8 14 .02 2.24
8 22 .03 5.28
8 30 .15 36
8 40 .1 32
8 65 .09 46.8
total 171.7

E(XY)=171.7

Cov(X,Y)= E(XY)-E(X)E(Y)=171.7-5.33*30.15=11.0005

Corr(X,Y)= Cov(X,Y)/ square root Var(X)Var(Y)= .2864

3. (Ch.2) Compute the following probabilities.

a. If Y is distributed N(1,4), find Pr(Y3).
Answer:

b. If Y is distributed N(3,9), find Pr(Y>0)

Answer:

c. If Y is distributed N(5,2), find Pr(6Y8)

Answer: