Magic Valley Memorial Hospital administrators have recently received an internal audit report that indicates that 15% of all patient bills contain an error of one form or another. After spending considerable effort to improve the hospital's billing process, the administrators are convinced that things have improved. They believe that the new error rate is somewhere closer to 0.05.Suppose that recently the hospital randomly sampled 10 patient bills and conducted a thorough study to determine whether an error exists. It found 3 bills with errors. Assuming that managers are correct that they have improved the error rate to 0.05, what is the probability that they would find 3 or more errors in a sample of 10 bills?
A) 0.0115
B) 0.0233
C) 0.0884
D) 0.0766

Question

Quizplus · Accepted Answer

The probability of finding 3 or more errors in a sample of 10 bills, assuming an error rate of 0.05, is 0.0115. This can be calculated using the binomial distribution formula:P(X >= 3) = 1 - P(X < 3)= 1 - (P(X = 0) + P(X = 1) + P(X = 2))= 1 - (0.3585 + 0.3774 + 0.2155)= 0.0115

Magic Valley Memorial Hospital Administrators Have Recently Received an Internal