(Answered) Officials in a small town are preparing the annual budget

Economics

Officials in a small town are preparing the annual budget for their community. As one component of this preparation, they want to estimate the proportion of their constituents that file fraudulent tax returns. Due to cost and time constraints they decide to only sample a representative subset of taxpayers and scrutinize their tax returns.

The town officials believe that if the proportion of fraudulent tax returns is higher than 5%, then increased administrative action against fraudulent tax filing is necessary. A 95% confidence interval for the proportion of fraudulent tax returns yields (2.75%; 6.12%). Based on this interval, what is the town officials' decision regarding administrative action against fraudulent tax filing?

a. Increase administrative action against fraudulent tax filing.

b. Leave administrative action against fraudulent tax filing as is.

c. Reduce administrative action against fraudulent tax filing.

d. Inconclusive.Need more information to make a decision.

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