Statistical Literacy To use the normal distribution to test a proportion p, the conditions np 5 and nq 5 must be satisfied. Does the value of p come from H0, or is it estimated by using p from the sample?
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Textbook Solutions for Understandable Statistics
Question
Focus Problem: Benfords Law Again suppose you are the auditor for a very large corporation. The revenue file contains millions of numbers in a large computer data bank (see 5). You draw a random sample of numbers from this file and 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. Test the claim that p is more than 0.301. Use ii. If p is in fact larger than 0.301, it would seem there are too many numbers in the file with leading 1s. 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. iii. Comment on the following statement: If we reject the null hypothesis at level of significance , we have not proved to be false. We can say that the probability is that we made a mistake in rejecting Based on the outcome of the test, would you recommend further investigation before accusing the company of fraud?
Solution
The first step in solving 9.3 problem number 6 trying to solve the problem we have to refer to the textbook question: Focus Problem: Benfords Law Again suppose you are the auditor for a very large corporation. The revenue file contains millions of numbers in a large computer data bank (see 5). You draw a random sample of numbers from this file and 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. Test the claim that p is more than 0.301. Use ii. If p is in fact larger than 0.301, it would seem there are too many numbers in the file with leading 1s. 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. iii. Comment on the following statement: If we reject the null hypothesis at level of significance , we have not proved to be false. We can say that the probability is that we made a mistake in rejecting Based on the outcome of the test, would you recommend further investigation before accusing the company of fraud?
From the textbook chapter HYPOTHESIS TESTING you will find a few key concepts needed to solve this.
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