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Exercise 1:

Consider the Markov chain with transition matrix

\[ P = \left( \begin{bmatrix} 1/2 & 1/2 \\ 1/4 & 3/4 \end{bmatrix}\right)\]

Find the fundamental matrix Z for this chain. Compute the mean first passage matrix using Z.

Solution:

Solve the equation to calculate the fundamental matrix Z for the given Markov chain with transition matrix P,

where P - the transition matrix and I - the identity matrx

(P-I)Z = 0

\[ (P-I) = \left( \begin{bmatrix} 1/2-1 & 1/2 \\ 1/4 & 3/4-1 \end{bmatrix}\right)\]

\[ (P-I) = \left( \begin{bmatrix} -1/2 & 1/2 \\ 1/4 & -1/4 \end{bmatrix}\right) \left( \begin{bmatrix} z_{11} & z_{12} \\ z_{21} & z_{22} \end{bmatrix}\right) = \left( \begin{bmatrix} 0 & 0 \\ 0 & 0 \end{bmatrix}\right)\]

\[-1/2z_{11} + 1/2z_{21} = 0\] \[1/4z_{11} - 1/4z_{12} = 0\] \[-1/2z_{12} + 1/2z_{22} = 0\] \[1/4z_{21} - 1/4z_{22} = 0\]

After solving the equation

\[z_{11} = z_{21}\] \[z_{11} = z_{12}\] \[z_{12} = z_{22}\] \[z_{21} = z_{22}\]

Sum of each row in the fundamental matrix Z should be equal to 1.

Now normalize so the sum of rows=1

Assume \[z_{11} = 1\]

\[Z = \left( \begin{bmatrix} 1 & 1 \\ 1 & 1 \end{bmatrix}\right)\]

To find first passage matrix N using Z, apply the formula:

\[N= Z-I\]

\[N= \left( \begin{bmatrix} 1 & 1 \\ 1 & 1 \end{bmatrix}\right)-\left( \begin{bmatrix} 1 & 0 \\ 0 & 1 \end{bmatrix}\right)= \left( \begin{bmatrix} 0 & 1 \\ 1 & 0 \end{bmatrix}\right)\]

Mean First Passage Matrix N:

\[N= \left( \begin{bmatrix} 0 & 1 \\ 1 & 0 \end{bmatrix}\right)\]

Fundamental Matrix Z for the given Markov Chain:

\[Z = \left( \begin{bmatrix} 1 & 1 \\ 1 & 1 \end{bmatrix}\right)\]