4.6 Exercise 37

The chance of an IRS audit for a tax return reporting more than $25,000 in income is about 2 percent 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 anwer the following questions.

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