Suppose the probability of an IRS audit is 2.9 percent for U.S. taxpayers who file form...

Suppose the probability of an IRS audit is 2.9 percent for U.S. taxpayers who file form 1040 and who earned $100,000 or more.

(a) What are the odds that such a taxpayer will be audited? (Round your answers to the nearest whole number.)

Odds that a taxpayer will be audited            to

(b) What are the odds against such a taxpayer being audited? (Round your answers to the nearest whole number.)

Odds against a taxpayer being audited

Expert Solution

Given:

Probability of an IRS audit is 2.9 percent for U.S. taxpayers who file form 1040 and who earned $100,000 or more

i.e

for every 100 taxpayers who file form 1040 and who earned $100,000 or more ; 2.9 of them are being audited.

i.e, 100-2.9 = 97.1 tax payers are not being audited.

Number of taxpayers that are being audited = 2.9

Number of taxpayers that are not being audited = 97.1

(a) the odds that such a taxpayer will be audited = Number of taxpayers that are being audited / Number of taxpayers that are not being audited = 2.9 / 97.1 = 0.029866 0

odds that such a taxpayer will be audited = 0

(b) the odds against such a taxpayer being audited = Number of taxpayers that are not being audited / Number of taxpayers that are being audited = 97.1/2.9 = 33.48276 33

Odds against a taxpayer being audited = 33

milcah answered 1 year ago

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Suppose the probability of an IRS audit is 2.9 percent for U.S. taxpayers who file form...

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