Question

Individual Taxpayers have around a 20% chance of being audited.

Answer 1

The random variable X represents the number of IRS audits a person with a tax return reporting more than $25,000 in income may have in a 20-year period. The values that X may take on range from 0 to 20, as each year is independent. The distribution of X is 'X~Poisson(0.40)', which means it follows a Poisson distribution with a mean of 0.40 audits per year.

Step-by-step explanation:

a. In words, define the random variable X:

The random variable X represents the number of IRS audits a person with a tax return reporting more than $25,000 in income may have in a 20-year period.

b. List the values that X may take on:

The values that X may take on range from 0 to 20, as each year is independent.

c. Give the distribution of X:

The distribution of X is 'X~Poisson(0.40)', which means it follows a Poisson distribution with a mean of 0.40 audits per year.