Analysis of Leading Didgits: the analysis of the leading (first) digits of check

Question

Analysis of Leading Didgits: the analysis of the leading (first) digits of checks led to the conclusion that companies in Brooklyn, New York, were guilty of fraud. For the purpose of this exercise, assume that the leading digits of check amounts are randomly gnerated by computer.

A.) Identify the possible leading digits.
B.) Find the mean and standard deviation of such leading digits.
C.) Use the range rule of thumb to identify the range of usual values.
D.) Can any leading digit be considered unusual? Why or why not?

Explanation / Answer

a) 0,1,2,3,4,5,6,7,8,9 b) mean = 4.5 sd = 2.87 c) range is approximately 2.87*4 = 11.48 or, the usual values will be between 4.5-2.87*2=-1.24 and 4.5+2.87*2=10.24 d) no leading digit can be considered unusual since all possible digits are in the range of usual values

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