MU – CBE – Marketing Management Business Statistics

 This material is used to support the teaching – learning process in the class.
 Students are required to come up with insight full questions to make the materials point of
discussion with their colleagues in the class.
IV. Theory of Elementary Probability and Probability Distribution
i) Rules of Probability
a) Special Rules of Additions
1. Suppose there are 500 students in CBE as shown in the following table.
Department Marketing Economics Accounting Cooperatives Management Total
No Students 110 90 100 75 125 500
What is the probability randomly selected students will be………
a) Either marketing or accounting?
b) Neither cooperatives nor management?
c) Not in economics?
b) General Rules of Additions
2. From a pack of playing card. What is the probability randomly chosen card is will be either a queen or
flower?
3. Suppose Tigray regional state tourism reported that last month 200 foreign country tourists visited King
Yohanis IV palace in Mekelle and Axum obelisk in Axum. 150 of the tourist visited the palace in Mekelle
and 110 visited Axum obelisk and 80 of them visited both king Yohanis IV palace in Mekelle and Axum
obelisk in Axum. What is randomly chosen tourist visited either King Yohanis IV palace in Mekelle or
Axum obelisk in Axum?
c) Special Rules of Multiplications
4. Two coins are tossed. What is the probability that both will land head up?
5. From past experience 90% of Addis tire would give service for 80,000 Km, it would not fails before
80,000 Km. If you buy 3 Addis tires, what is the probability three of the tires will provide at least 80,000
Km service?
d) General Rules of Multiplications
6. There are 10 balls in the jar. 6 of the balls are yellow while the remaining are green. Two balls are to be
selected one after the other, what is the probability of selecting a green ball followed by another green
ball?
7. Suppose the board of directors of Commercial bank of Ethiopia wants to appoint loan recovery director.
The board consists of eight men and four women members and the members are applied for the position.
What is the probability that…….
a) Three of the board member will be women?
b) Four of the member will be men?
ii) Conditional Probability
8. Twenty-one percent of the executives in a large advertising firm are at the top salary level. It is further
known that 40% of all the executives at the firm are women. Also, 6.4% of all executives are women and
are at the top salary level. Recently, a question arose among executives at the firm as to whether there is
any evidence of salary inequity. Assuming that some statistical considerations are met, do the percentages
reported above provide any evidence of salary inequity?
9. A consulting firm is bidding for two jobs, one with each of two large multinational corporations. The
company executives estimate that the probability of obtaining the consulting job with firm A, event A, is
0.45. The executives also feel that if the company should get the job with firm A, then there is a 0.90
probability that firm B will also give the company the consulting job. What are the company’s chances of
getting both jobs?
iii) Bayes Theorem
10. A factory production line is manufacturing a bottle using three machines, A, B and C. Of the total output,
machine A is responsible for 25%, machine B for 35% and machine C for the rest. It is known from

Ch-4:- Theory of Elementary Probability and Probability Distribution Illustrative Examples

MU – CBE – Marketing Management Business Statistics

previous experience with the machines that 5% of the output from machine A is defective, 4% from
machine B and 2% from machine C. A bottle is chosen at random from the production line and found to
be defective. What is the probability that it came from…..
a) Machine A b) Machine B c) Machine C
11. An economist believes that during periods of high economic growth, the U.S. dollar appreciates with
probability 0.70; in periods of moderate economic growth, the dollar appreciates with probability 0.40;
and during periods of low economic growth, the dollar appreciates with probability 0.20. During any
period of time, the probability of high economic growth is 0.30, the probability of moderate growth is
0.50, and the probability of low economic growth is 0.20. Suppose the dollar has been appreciating during
the present period. What is the probability we are experiencing at a period of………
a) High economic growth?
b) Moderate economic growth?
c) Low economic growth?
iv) Discrete Probability
12. Suppose the following data shows the sales of Automobiles of Peugeot brand by Mesfine Industrial
Engineering (MEI) for the past 300 days of operation. The sales data shows 54 days with no Auto sold,
117 days with 1 Auto sold, 72 days with 2 Auto sold, 42 days with 3 Auto sold, 12 days with 4 Auto sold
and 3 days with 5 Auto sold. What is the probability….
a) Exactly one Auto sales on particular day?
b) At least three Autos sales on particular day?
c) Three or more Autos sales on particular day?
d) At most two Autos sales on particular day?
e) No more than two autos on particular day?
f) What are the expected No of Auto sales per day?
g) What is the variance and standard deviation of Auto sales?
v) Binomial Probability
13. Assume that 30% of Marketing graduates join as staff of Ethiopian Air Lines (EAL). 6 Marketing
graduate students applied for the vacant position. What the probability that …
a) None of them join? d) Exactly three of them?
b) Exactly one of them? e) Exactly all of the them?
c) Exactly two of them?
f) What is expected value, variance and standard deviation
vi) Normal Probability
14. Assume that the monthly expenditures of 500 families of a certain economic group
are normally distributed with a mean of Birr 300 and a standard deviation of Birr
50 per week.
a) What percent of the expenditure is in b/n birr 300 and 350 per week?
b) What percentage of the expenditures is in b/n birr 153 and 250 per week?
c) What percentage of the expenditures is less than birr 217 per week?
d) What percentage of the expenditure is in b/n birr 212 and 397 per week?
e) How many families will expend more than birr 398 per week?

Ch-4:- Theory of Elementary Probability and Probability Distribution Illustrative Examples