Question

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 an auditor for a very large corporation. The revenue report involves millions of numbers in a large computer file. Let us say you took a random sample of n = 220 numerical entries from the file and r = 49 of the entries had a first nonzero digit of 1. Let p represent the population proportion of all numbers in the corporate file that have a first nonzero digit of 1. (i) Test the claim that p is less than 0.301. Use α = 0.10. (a) What is the level of significance? 0.10 Correct: Your answer is correct. State the null and alternate hypotheses. H0: p < 0.301; H1: p = 0.301 H0: p = 0.301; H1: p < 0.301 H0: p = 0.301; H1: p > 0.301 H0: p = 0.301; H1: p ≠ 0.301 Correct: Your answer is correct. (b) What sampling distribution will you use? The Student's t, since np > 5 and nq > 5. The Student's t, since np < 5 and nq < 5. The standard normal, since np > 5 and nq > 5. The standard normal, since np < 5 and nq < 5. Correct: Your answer is correct. What is the value of the sample test statistic? (Round your answer to two decimal places.) -2.39 Incorrect: Your answer is incorrect. (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. WebAssign Plot WebAssign Plot WebAssign Plot WebAssign Plot Correct: Your answer is correct. (d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level α? At the α = 0.10 level, we reject the null hypothesis and conclude the data are statistically significant. At the α = 0.10 level, we reject the null hypothesis and conclude the data are not statistically significant. At the α = 0.10 level, we fail to reject the null hypothesis and conclude the data are statistically significant. At the α = 0.10 level, we fail to reject the null hypothesis and conclude the data are not statistically significant. Correct: Your answer is correct. (e) Interpret your conclusion in the context of the application. There is sufficient evidence at the 0.10 level to conclude that the true proportion of numbers with a leading 1 in the revenue file is less than 0.301. There is insufficient evidence at the 0.10 level to conclude that the true proportion of numbers with a leading 1 in the revenue file is less than 0.301. Correct: Your answer is correct.

Answer 1