According to Benford's Law, a Variety of Different Data Sets

question 72

Essay

According to Benford's Law, a variety of different data sets include numbers with leading (first) digits that
follow the distribution shown in the table below. Test for goodness-of-fit with Benford's Law. $$\begin{array} { | l | c | c | c | c | c | c | c | c | c | } \hline \text { Leading Digit } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 \\\hline \begin{array} { l } \text { Benford's law: } \\\text { distribution of } \\\text { leading digits }\end{array} & 30.1 \% & 17.6 \% & 12.5 \% & 9.7 \% & 7.9 \% & 6.7 \% & 5.8 \% & 5.1 \% & 4.6 \% \\\hline\end{array}$$ When working for the Brooklyn District Attorney, investigator Robert Burton analyzed the leading digits of the
amounts from 784 checks issued by seven suspect companies. The frequencies were found to be 0, 18, 0, 79, 476, 180, 8,
23, and 0, and those digits correspond to the leading digits of 1, 2, 3, 4, 5, 6, 7, 8, and 9, respectively. If the observed
frequencies are substantially different from the frequencies expected with Benford's Law, the check amounts
appear to result from fraud. Use a 0.05 significance level to test for goodness-of-fit with Benford's Law. Does it
appear that the checks are the result of fraud?

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Definitions:

Prospect Component

An element or factor that qualifies a person or business as a potential customer worthy of a salesperson’s time and effort.

Advertising Activity

Actions or efforts taken to promote products, services, or brands to potential customers through various media channels.

Product Distribution

The process of making a product available to the consumers through a chain of supply, involving transportation, warehousing, and retailing.