The Probability That Federal Income Tax Returns Will Have 0

question 16

Multiple Choice

The probability that federal income tax returns will have 0, 1, or 2 errors is 0.73, 0.23, and 0.04, respectively. If 10 randomly selected returns are audited, what is the probability that eight will have no errors, two will have one error, and none will have two errors?

• A) 0.043
• B) 0.086
• C) 0.192
• D) 0.384

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Definitions:

Increasing Returns

An increase in a firm’s output by a larger percentage than the percentage increase in its inputs.

Diminishing Returns

A principle stating that after a certain point, additional investment or effort yields progressively smaller increases in output.

Marginal-cost Curve

The marginal-cost curve represents how the cost of producing one additional unit of a good changes as its production volume varies.

Marginal Product

The additional output that is generated by employing one more unit of a specific input, ceteris paribus.