Let p represent the population proportion of all numbers in the computer fi le that have a leading digit of 1.

i. Test the claim that p is more than 0.301. Use a 5 0.01.

ii. If p is in fact larger than 0.301, it would seem there are too many numbers in the fi le with leading 1’s. Could this indicate that the books have been “cooked” by artifi cially lowering numbers in the fi le? Comment from the point of view of the Internal Revenue Service. Comment from the perspective of the Federal Bureau of Investigation as it looks for

“profi t skimming” by unscrupulous employees.

iii. Comment on the following statement: “If we reject the null hypothesis at level of signifi cance

a, we have not proved H0 to be false. We can say that the probability is a that we made a mistake in rejecting H0.” Based on the outcome of the test, would you recommend further investigation before accusing the company of fraud?