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Solved: Using Benfords law According to Benfords law (Exercise 5, page 359), the
Chapter 6, Problem 99(choose chapter or problem)
Using Benford’s law According to Benford’s law (Exercise 5, page 359), the probability that the first digit of the amount of a randomly chosen invoice is an 8 or a 9 is 0.097. Suppose you examine randomly selected invoices from a vendor until you find one whose amount begins with an 8 or a 9.
(a) How many invoices do you expect to examine until you get one that begins with an 8 or 9? Justify your answer.
(b) In fact, you don’t get an amount starting with an 8 or 9 until the 40th invoice. Do you suspect that the invoice amounts are not genuine? Compute an appropriate probability to support your answer.
Questions & Answers
QUESTION:
Using Benford’s law According to Benford’s law (Exercise 5, page 359), the probability that the first digit of the amount of a randomly chosen invoice is an 8 or a 9 is 0.097. Suppose you examine randomly selected invoices from a vendor until you find one whose amount begins with an 8 or a 9.
(a) How many invoices do you expect to examine until you get one that begins with an 8 or 9? Justify your answer.
(b) In fact, you don’t get an amount starting with an 8 or 9 until the 40th invoice. Do you suspect that the invoice amounts are not genuine? Compute an appropriate probability to support your answer.
ANSWER:Step 1 of 4
Given,
The probability that the first digit of the amount is an 8 or a 9,
X = number of invoices from a vendor until you find one whose amount begins with an 8 or a 9.
Let’s determine the following: