Waiters are expected to keep track of their income from tips and report it on their income tax forms. The Internal Revenue Service suspects that one waiter (we’ll call him “Jared”) has been under-reporting his income, so they are auditing his tax return. An IRS agent goes through the restaurant’s files and obtains a random sample of 80 credit card receipts from people Jared served. The average tip size shown on these receipts was $9.68 with a standard deviation of $2.72. a) Create a 90% confidence interval for the mean size of all of Jared’s credit card tips. b) On his tax return Jared had claimed that his tips averaged $8.73. Based on their confidence interval, does the IRS have a case against him? Explain
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Waiters are expected to keep track of their income from tips and report it on their income tax forms. The Internal Revenue Service suspects that one waiter (we’ll call him “Jared”) has been under-reporting his income, so they are auditing his tax return. An IRS agent goes through the restaurant’s files and obtains a random sample of 80 credit card receipts from people Jared served. The average tip size shown on these receipts was $9.68 with a standard deviation of $2.72.
- a) Create a 90% confidence interval for the mean size of all of Jared’s credit card tips.
- b) On his tax return Jared had claimed that his tips averaged $8.73. Based on their confidence interval, does the IRS have a case against him? Explain.
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