"How many 4 letter words on the alphabet {a,b,c} in which 'a' occurs exactly twice are there?"
My answer is incorrect as I answered 3*3*2*2 4 letter words.
However, this doesn't necessarily remove 'a' from the letter choices. What would be the correct way to solve this?
Instead of proceedng in order i.e. choosing first letter, then second etc. , choose which positions you want $a$ to occur in , and then choose what should come in the other positions.
For example, we have four positions $1,2,3,4$. Two of these positions can be chosen in $\binom 42 = 6$ ways. We place $a$ in these places.
Now, in the rest of the places, we have a choice of either $b$ or $c$ going in each place. Two places, two choices for each place gives a total of $2^2 = 4$ choices.
Multiplying these gives us $6 \times 4 = 24$ choices.
To actually write down all the words, pick each possible combination of two places, put $a$ there, and vary $b,c$ across the other places.
For example, fixing positions $2$ and $4$ for $a$ gives $baba,baca,caba,caca$, four of the desired words.
As for your answer, reducing the option pool cannot be done by position, since the positions of $a$ don't occur in order, or say within the first two positions, or in any particular pattern. However, treating them independently of the other positions does the job.