Recall that Benford's Law claims that numbers chosen from very large data files tend to have "1" as the first nonzero digit disproportionately often. In fact, research has shown that if you randomly draw a number from a very large data file, the probability of getting a number with "1" as the leading digit is about 0.301. Now suppose you are the auditor for a very large corporation. The revenue file contains millions of numbers in a large computer data bank. You draw a random sample of n = 223 numbers from this file and r = 85 have a first nonzero digit of 1. Let p represent the population proportion of all numbers in the computer file that have a leading digit of 1.i need help with (ii) and (iii) Recall that Benford's Law claims that numbers chosen from very large data files tend to have "1" as the first nonzero digit disproportionately often. In fact, research has shown that if you randomly draw a number from a very large data file, the probability of getting anumber with "1" as the leading digit is about 0.301. Now suppose you are the auditor for a very large corporation. The revenue file contains millions of numbers in a large computer data bank. You draw a random sample of n = 223 numbers from this file and r = 85have a first nonzero digit of 1. Let p represent the population proportion of all numbers in the computer file that have a leading digit of 1.(i) Test the claim that p is more than 0.301. Use a = 0.05.(a) What is the level of significance?State the null and alternate hypotheses.О н: р%3D 0.3013B Н,: р> 0.301О но: р %3D 0.3013B Н,: р <0.301O Ho: p > 0.301; H,: p = 0.301О но: р 3D 0.301; н,: р+ 0.301(b) What sampling distribution will you use?O The standard normal, since np > 5 and ng > 5.O The standard normal, since np < 5 and ng < 5.O The Student's t, since np > 5 and ng > 5.O The Student's t, since np < 5 and ng < 5.What is the value of the sample test statistic? (Round your answer to two decimal places.)(c) Find the P-value of the test statistic. (Round your answer to four decimal places.) Sketch the sampling distribution and show the area corresponding to the P-value.O-4-224O-4-22O-4-224O-4-22(d) Based on youvers in parts (a) to (c), wáll youject or fail to reject the null hypothesis? Are the data statistically significant at level a?O At the a = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.O At the a = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.O At the a = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.O At the a = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.(e) Interpret your conclusion in the context of the application.O There is sufficient evidence at the 0.05 level to conclude that the true proportion of numbers with a leading 1 in the revenue file is greater than 0.301.O There is insufficient evidence at the 0.05 level to conclude that the true proportion of numbers with a leading 1 in the revenue file is greater than 0.301.(ii) If p is in fact larger than 0.301, it would seem there are too many numbers in the file with leading 1's. Could this indicate that the books have been "cooked" by artificially lowering numbers in the file? Comment from the point of view of the Internal Revenue Service. Comment from the perspective of the FederalBureau of Investigation as it looks for "profit skimming" by unscrupulous employees.O No. There does not seem to be too many entries with a leading digit 1.O No. There seems to be too many entries with a leading digit 1.O Yes. There seems to be too many entries with a leading digit 1.O Yes. There does not seem to be too many entries with a leading digit 1.(iii) Comment on the following statement: If we reject the null hypothesis at level of significance a, we have not proved Hn to be false. We can say that the probability is a that we made a mistake in rejecting He: Based on the outcome of the test, would you recommend further investigation before accusing the companyof fraud?O we have not proved Ho to be false. Because our data lead us to accept the null hypothesis, more investigation is not merited.O we have not proved Ho to be false. Because our data lead us to reject the null hypothesis, more investigation is not merited.O we have proved Ho to be false. Because our data lead us to reject the null hypothesis, more investigation is not merited.O we have not proved Ho to be false. Because our data lead us to reject the null hypothesis, more investigation is merited.

()if pis in fact larger than 0.301, t would seem there are too many numbers in the file with leading 1's. Could this indicate that the books have been "cooked" by artificially lowering numbers in the file? Comment from the point of view of the Internal Revenue Service. Comment from the perspective of the Federal Bureau of Investigation as it looks for "profit skimming" by unscrupulous employees. O No. There does not seem to be too many entries wth a leading digit 1. O No. There seems to be too many entries wth a leading digit 1. O ves. There seems to be too many entries wth a leading digit 1. O Yes. There dees not seem to be too many entries with a leading digit 1. () Comment on the following statementi If we reject the null hypothesis at level of significance a, we have not proved Ho to be false. We can say that the probability is a that we made a mistake in rejecting He Based on the outcome of the test, would you recommend further investigation before accusing the company of fraud O we have not proved Ho to be false. Because our data lead us to accept the null hypothesis. more investigation is not merited. O we have not proved Ho to be false. Because our data lead us to reject the null hypothesis, more investigation is not merited. O we have proved Ho to be false. Because our data lead us to reject the null hypothesis, more investigation is not merited. O we have not proved Ho to be false. Because our data lead us to reject the null hypothesis, more investigation is merited.

7th Edition

ISBN:9781305115545

Author:James Stewart, Lothar Redlin, Saleem Watson

Publisher:James Stewart, Lothar Redlin, Saleem Watson

Chapter9: Counting And Probability

Section9.3: Binomial Probability

Problem 2E: If a binomial experiment has probability p success, then the probability of failure is...