Based on a USA Today online article by Kevin McCoy (“IRS audit rate for individuals drops,” www.usatoday.com, Feb. 24, 2015), an individual taxpayer’s chance of being audited in 2014 was 0.0086, the lowest in ten years.
a. Discuss the type of probability assessment used to arrive at the 0.0086 level.
b. If a sample of 1,000 taxpayers is selected, what is the expected number that will be audited?