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Chapter 6: Q. 93 (page 405)

Using Benford's law According to Benford's law (Exercise 5, page 353 ), the probability that the first digit of the amount on a randomly chosen invoice is a 1or a 2is 0.477. Suppose you examine an SRS of 90invoices from a vendor and find 29that have first digits 1or 2. Do you suspect that the invoice amounts are not genuine? Compute an appropriate probability to support your answer.

Short Answer

Expert verified

The appropriate probability isP(X≤29)≈0.0021=0.21%

Step by step solution

01

Given Information 

The probability that the first digit of the amount on a randomly chosen invoice is a 1or a 2=0.477

Number of SRS invoices=90

02

Explanation 

Given:

p=0.477

n=90

Definition binomial probability:

P(X=k)=nk·pk·(1-p)n-k

Add the corresponding probabilities:

localid="1650032592085" P(X≤29)=P(X=0)+P(X=1)+…+P(X=29)≈0.0021=0.21%

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