The U.S Internal Revenue Service (IRS), published the Annual Income Tax figures

Question

The U.S Internal Revenue Service (IRS), published the Annual Income Tax figures on individual Income Tax returns in Statistics of Income, Individual Income Tax Returns for the year 2005,the IRS reported the average tax of individuals Income tax as $10,500.00. In actual fact the IRS reported the average tax returns of a sample of 180,000 individuals’ Income tax return from a total of more than 135 Million such returns.

(i).What is the population under consideration.  

(ii).What is the variable of interest.  

(iii).Is the average tax reported by IRS a population mean or a sample mean?

(iv).Do you agree that we should expect the average tax Xbar of the 180,00 individuals sampled by the IRS to be exactly the same as the mean tax µ of all individual income tax returns for the year 2005.If Yes, fine but if no explain why you do not agree.  

(v).How can we answer questions about sampling errors?. For instance, is the sample mean tax Xbar reported by the IRS likely to be within $200 of the population mean tax µ.  

Explanation / Answer

1 Total Return           135,000,000 Sample                  180,000 Population Under Consideration 0.13% II variable is tax return III It is population Mean IV Yes it will be the same

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