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4.4 Exercise 39

Avg difficulty 2.5

The chance of an IRS audit for a tax return with over $25,000 in income is about 2% per year. Suppose that 100 people with tax returns over $25,000 are randomly picked. We are interested in the number of people audited in one year. Use a Poisson distribution to answer the following questions.

  1. In words, define the random variable X.
  2. List the values that X may take on.
  3. How many are expected to be audited?
  4. Find the probability that no one was audited.
  5. Find the probability that at least three were audited.

OpenStax Introductory Business Statistics 2e, 4.4 Poisson Distribution, exercise 39

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Adapted from Introductory Business Statistics 2e © 2023 Rice University. Licensed under CC BY 4.0. Source: Introductory Business Statistics 2e. Imported at revision 50ec917.