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Base Rates and Prior Probability
Grade Level
LSAT
LR.108 Base Rates and Prior Probability
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Which choice best evaluates the auditor's conclusion?
A
The conclusion follows because 70 percent is much larger than 7 percent.
B
The anomaly is evidence, but a tenfold likelihood difference applied to a 0.3 percent base rate may still leave embezzlement unlikely for a given entry.
C
The anomaly has no evidentiary value because it can appear in ordinary corrections.
D
The base rate of embezzlement should be ignored once an anomaly is observed.
E
The auditor can determine probability only by knowing the exact dollar amount of the entry.
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