Question

Selecting a few households from New York City and observing whether or not they own stocks when it is known that 28% of all households in New York City own stocks. Is this experiment a binomial experiment? Explain why.

Answer 1

Since for each household there are only two possible outcomes, the a household owning stock is independent of any other household and there is a fixed number of trials, this experiment is a binomial experiment.

Explanation:

We have to take into consideration three things:

For each household, there are only two possible outcomes, either they own stocks, or they do not.

The probability of a household owning stock is independent of any other household, that is, for any household, the probability of someone owning stocks is 28%.

There is a fixed number of trials.

Is this experiment a binomial experiment?

Since for each household there are only two possible outcomes, the a household owning stock is independent of any other household and there is a fixed number of trials, this experiment is a binomial experiment.