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Marketing A market survey shows that half the owners of Sorey State Boogie Boards became disenchanted with the product and switched to \(C \& T\) Super Professional Boards the next surf season, while the other half remained loyal to Sorey State. On the other hand, three quarters of the \(\mathrm{C\&T}\) Boogie Board users remained loyal to \(\mathrm{C\&T}\), while the rest switched to Sorey State. Set these data up as a Markov transition matrix, and calculate the probability that a Sorey State Board user will be using the same brand two seasons later. [HINT: See Example 1.]

Short Answer

Expert verified
The probability that a Sorey State Board user will be using the same brand two seasons later is 37.5%.

Step by step solution

01

Define the transition matrix

Let's represent the brands with the following notation: - SS: Sorey State Boogie Boards - CT: C & T Super Professional Boards We can define the transition matrix P as follows: P = \(\begin{bmatrix} P(SS \to SS) & P(SS \to CT) \\ P(CT \to SS) & P(CT \to CT) \end{bmatrix}\) Where each entry represents the probability of a user switching from one brand to another or staying with the same brand. Based on the problem statement, we know: - Half of the SS users switched to CT, so P(SS → SS) = 1 - 0.5 = 0.5 and P(SS → CT) = 0.5. - Three quarters of CT users remained with CT, so P(CT → CT) = 0.75 and P(CT → SS) = 0.25. Now, we can substitute these values into the transition matrix: P = \(\begin{bmatrix} 0.5 & 0.5 \\ 0.25 & 0.75 \end{bmatrix}\)
02

Calculate entries of the transition matrix for 2 seasons

To find the transition matrix for 2 seasons, we need to multiply the matrix P by itself. This is called matrix squaring. Let P² denote the transition matrix after 2 seasons: P² = P × P = \(\begin{bmatrix} 0.5 & 0.5 \\ 0.25 & 0.75 \end{bmatrix}\) × \(\begin{bmatrix} 0.5 & 0.5 \\ 0.25 & 0.75 \end{bmatrix}\) Compute the matrix product: P² = \(\begin{bmatrix} (0.5×0.5 + 0.5×0.25) & (0.5×0.5 + 0.5×0.75) \\ (0.25×0.5 + 0.75×0.25) & (0.25×0.5 + 0.75×0.75) \end{bmatrix}\) Simplify, and obtain the result: P² = \(\begin{bmatrix} 0.375 & 0.625 \\ 0.3125 & 0.6875 \end{bmatrix}\)
03

Identify the probability of interest

Recall that we are interested in the probability that an SS user will still be using the same brand two seasons later. This is given by the value P(SS → SS) in the P² matrix: P(SS → SS; 2 seasons) = 0.375 So, the probability that an SS user will still be using the Sorey State Board two seasons later is 37.5%.

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