STAT - Module 6 problem 5

The first significant digit in any number must be 1,2,3,4,5,6,7,8, or 9. It was discovered that first digit do not occur with equal frequency. Probabilities of occurrence to the first digit in a number are shown in the accompanying table. The probability distribution is now known as Bedford’s law. For example, the following distribution represents the first digits in 232 allegedly fraudulent checks written to a bogus company by an employee attempting to embezzle funds from his employer. Complete parts (a) and (b).

Click the icon to view the tables.

a) Using the level of significance = 0.05, test whether the first digits in the allegedly fraudulent checks obey Benford's law. Do the first digits obey the Beford's law?

No

Yes

b) Based on th results of part (a), could one think that the employee is guilty of embezzlement?

Yes

No