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[Discrete Probability Distributions] Every economy is subject to the occurrence of shocks. Underdeveloped/developing countries are especially vulnerable to supply shocks, either related to the relative price of agricultural commodities or climate conditions. Floods occur randomly and independently over the course of a year in Bangladesh.
The average is 3 major floods every 2 years in this region. Hint: be careful with the time intervals for the questions below.
(a) What is our random variable? Is it discrete or continuous? Explain.
(b) From the given information, what probability distribution can you assume for this random variable? Explain.
(c) What is the probability of 2 floods in the next two years?
(d) What is the probability of 3 floods in 5 years?
(e) Find the probability of a major flood occurrence this year.
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