Question

Suppose that a person who has recently helped start a company for the first time is randomly selected. The probability that the company will fail within 2 years is 0.3. Suppose we follow 14 start-ups ​(98 ​people) for 2 years and record the number of people whose company failed. Why is the binomial model inappropriate for finding the probability that at least 42 of these 98 people

Answer 1

The Binomial model is inappropriate because the Trials are independent of each other

Explanation:

Given data :

probability of a company started by a person failing with 2 years = 0.3

14 start-ups ( 98 people ) are followed for 2 years

The probability that at least 42 of these 98 people will fail in 2 years

Reason why the Binomial model is inappropriate for finding the probability that at least 42 of these 98 people will fail

The Binomial model is inappropriate because the Trials are independent of each other