Henry, a Persistent Salesman, Calls North's Hardware Store Once a Week

question 27

Essay

Henry, a persistent salesman, calls North's Hardware Store once a week hoping to speak with the store's buying agent, Shirley. If Shirley does not accept Henry's call this week, the probability she will do the same next week is .35. On the other hand, if she accepts Henry's call this week, the probability she will not do so next week is .20.
a.Construct the transition matrix for this problem.
b.How many times per year can Henry expect to talk to Shirley?
c.What is the probability Shirley will accept Henry's next two calls if she does not accept his call this week?
d.What is the probability of Shirley accepting exactly one of Henry's next two calls if she accepts his call this week?

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, indicating the percentage of tax applied to their highest dollar of income.

Average Tax Rate

The proportion of total income that a taxpayer pays in taxes, calculated by dividing the total taxes paid by the total taxable income.

Taxable Income

The amount of income that is used to calculate how much tax an individual or a company owes to the government.

GAAP

Generally Accepted Accounting Principles, a common set of accounting rules and standards used in financial reporting.