An investigator analyzed the leading digits from 791 checks issued by seven suspect companies. The frequencies were found to be 1, 12, 0, 83, 408, 255, 6, 24, and 2, and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9, respectively. If the observed frequencies are substantially different from the frequencies expected with Benford's law shown below, the check amounts appear to result from fraud. Use a 0.10 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud? Leading Digit Actual Frequency Benford's Law: Distribution of Leading Digits 9 83 17.6% 408 7.9% 255 6.7% 30.1% 12.5% 9.7% 5.8% 5.1% 4.6% Determine the null and alternative hypotheses. Họ: The leading digits are from a population that conforms to Benford's law. H: At least one leading digit has a frequency that does not conform to Benford's law. Calculate the test statistic, . x= (Round to three decimal places as needed.)

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section: Chapter Questions
Problem 13PT
icon
Related questions
Question

Calculate the test statistic. 

Calculate the p-value. 

What is the conclusion of this test?

An investigator analyzed the leading digits from 791 checks issued by seven suspect companies. The frequencies were found to be 1, 12, 0, 83, 408, 255, 6, 24, and 2, and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9, respectively. If the observed frequencies are substantially
different from the frequencies expected with Benford's law shown below, the check amounts appear to result from fraud. Use a 0.10 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud?
Leading Digit
Actual Frequency
Benford's Law: Distribution of Leading Digits
1
3
4
7
8.
9.
1
12
83
408
255
6.
24
2
30.1%
17.6%
12.5%
9.7%
7.9%
6.7%
5.8%
5.1%
4.6%
Determine the null and alternative hypotheses.
Ho: The leading digits are from a population that conforms to Benford's law.
H4: At least one leading digit has a frequency that does not conform to Benford's law.
Calculate the test statistic, x.
x2 = (Round to three decimal places as needed.)
Transcribed Image Text:An investigator analyzed the leading digits from 791 checks issued by seven suspect companies. The frequencies were found to be 1, 12, 0, 83, 408, 255, 6, 24, and 2, and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9, respectively. If the observed frequencies are substantially different from the frequencies expected with Benford's law shown below, the check amounts appear to result from fraud. Use a 0.10 significance level to test for goodness-of-fit with Benford's law. Does it appear that the checks are the result of fraud? Leading Digit Actual Frequency Benford's Law: Distribution of Leading Digits 1 3 4 7 8. 9. 1 12 83 408 255 6. 24 2 30.1% 17.6% 12.5% 9.7% 7.9% 6.7% 5.8% 5.1% 4.6% Determine the null and alternative hypotheses. Ho: The leading digits are from a population that conforms to Benford's law. H4: At least one leading digit has a frequency that does not conform to Benford's law. Calculate the test statistic, x. x2 = (Round to three decimal places as needed.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Basics of Inferential Statistics
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Glencoe Algebra 1, Student Edition, 9780079039897…
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
Holt Mcdougal Larson Pre-algebra: Student Edition…
Holt Mcdougal Larson Pre-algebra: Student Edition…
Algebra
ISBN:
9780547587776
Author:
HOLT MCDOUGAL
Publisher:
HOLT MCDOUGAL