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An Internal Revenue Service inspector is to select 3 corporations from a list of 15 for tax audit purposes. Of the 15 corporations, 6 earned profits and 9 incurred losses during the year for which the tax retums are to be audited. If the IRS inspector decides to select 3 corporations randomly, find the probability that the number of corporations in these 3 that incurred losses during the year for which the tax returns are to be audited is a. exactly 2 b. none c. at most

Short Answer

Expert verified
To find the probability that exactly 2, none, and at most 1 corporation(s) incurred losses out of 3 corporations randomly chosen, perform calculations based on the combinations formula and the probability formula of binomial distribution.

Step by step solution

01

Understanding the Problem

There are a total of 15 corporations. Of these, 6 earned profits and 9 incurred losses. The IRS inspector has to select 3 corporations randomly. The task is to calculate the probability of incurring losses in the selection.
02

Calculating for 'exactly 2' corporations having losses

The probability of exactly 2 corporations having losses is calculated using the combinations formula. Here the formula is \[ P(X=2) = C(3,2) * (9/15)^2 * (6/15) \] Since there are three corporations and we are interested in exactly two of them, \( C(3,2) \) gives us the number of ways we can select 2 out of 3. The term \((9/15)^2\) represents the probability of selecting a corporation that incurred losses, raised to the power of 2 because we want exactly two such corporations. The term \((6/15)\) represents the probability of selecting a corporation that earned profits.
03

Calculating for 'none' corporations having losses

The probability of no corporations having losses is calculated using the combinations formula. Here the formula is \[ P(X=0) = C(3,0) * (9/15)^0 * (6/15)^3 \] Since we are interested in no corporations that incurred losses, \((9/15)^0\) represents the probability of not selecting a corporation that incurred losses, and \((6/15)^3\) represents the probability of selecting three corporations that earned profits.
04

Calculating for 'at most 1' corporation having losses

The probability of at most one corporation having losses means there could either be no corporation or just one corporation that incurred losses. Here the formula is \[ P(X≤1) = P(X=0) + P(X=1) = [C(3,0) * (9/15)^0 * (6/15)^3] + [C(3,1) * (9/15)^1 * (6/15)^2] \] Each term on the right side uses the combinations formula and represents the probability of selecting a specific number of corporations that incurred losses, either zero or one.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Understanding Combinations
When tackling problems that involve selecting a certain number of items from a larger group, such as our IRS inspector selecting corporations, combinations play a crucial role. They help us determine how many ways we can choose items without considering the order of selection. This is important because the order in which corporations are chosen doesn’t affect the probability outcome.
To calculate combinations, we use the formula:
  • \[C(n, r) = \frac{n!}{r!(n-r)!}\]
Where \(n\) is the total number of items, and \(r\) is the number of items to select.
In our problem, when we need to find the number of ways to select 2 corporations out of 3, we use \(C(3,2)\). This combination, calculated as \(\frac{3!}{2!(3-2)!} = 3\), tells us there are three different ways to choose 2 corporations for the audit.
Mechanics of Random Selection
Random selection is a central theme in probability problems, ensuring that each possibility is equally likely. For our IRS inspector, randomly choosing corporations means each set of corporations has an equal chance of being selected, irrespective of their profit or loss status.
When conducting a random selection, it’s as if we were placing all potential selections into a hat and drawing without any bias. This randomness guarantees that each draw is independent, and each possible outcome follows a uniform distribution.
  • This concept is fundamental in calculating unbiased probabilities, as it assumes every set of selections is possible and not influenced externally.
For the inspector, randomly selecting 3 corporations out of 15 ensures that all possible combinations of these corporations can be equally accounted for in our calculations.
Exploring Statistical Methods
In probability exercises like the IRS inspector’s selection, statistical methods simplify complex problems. Our primary method here involves using combinations coupled with probability calculations to assess how likely certain outcomes are.
In step-by-step problems, methods often include:
  • Combining probabilities with combination numbers to find the chance of specific outcomes.
  • Applying probability principles like independence and mutual exclusivity.
  • Evaluating conditions, such as "exactly" or "at most," to ensure all scenarios are considered correctly.
By understanding and applying these statistical methods, we break down a larger probability problem into manageable calculations, making it easier to find accurate results for each scenario.
Understanding Mathematics Education
Teaching probability requires explaining complex concepts like combinations and random selections in easily graspable terms. The goal is not just finding the correct answer but ensuring students understand the process.
Effective mathematics education focuses on:
  • Providing real-world examples (like the IRS problem) to demonstrate practical applications of probability concepts.
  • Using visual aids or simulations to illustrate random selection and probability outcomes.
  • Encouraging step-by-step breakdowns to make each part of the problem more digestible for learners.
By emphasizing clear explanations and relatable problems, educators aim to build students' confidence and comprehension in statistical methods and probability, preparing them for future mathematical challenges.

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Most popular questions from this chapter

Twenty corporations were asked whether or not they provide retirement benefits to their employees. Fourteen of the corporations said they do provide retirement benefits to their employees, and 6 said they do not. Five corporations are randomly selected from these \(20 .\) Find the probability that a., exactly 2 of them provide retirement benefits to their employees. b. none of them provides retirement benefits to their employees. c. at most one of them provides retirement benefits to employees.

A household receives an average of \(1.7\) pieces of junk mail per day. Find the probability that this household will receive exactly 3 pieces of junk mail on a certain day. Use the Poisson probability distribution formula.

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A household can watch National news on any of the three networks \(-\mathrm{ABC}, \mathrm{CBS}\), or \(\mathrm{NBC}\). On a certain day, five households randomly and independently decide which channel to watch. Let \(x\) be the number of households among these five that decide to watch news on \(\mathrm{ABC}\). Is \(x\) a discrete or a continuous random variable? Explain. What are the possible values that \(x\) can assume?

Which of the following are binomial experiments? Explain why. a. Rolling a die many times and observing the number of spots b. Rolling a die many times and observing whether the number obtained is even or odd c. Selecting a few voters from a very large population of voters and observing whether or not each of them favors a certain proposition in an election when \(54 \%\) of all voters are known to be in favor of this proposition.

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