A factory produces computer chips, and the proportion of defective chips is 0.01, i.e., p=0.01.
Suppose you take a sample with 25 chips, and 1 out of them is defective. And let X be the number of defective chips among this 25 chips.
What is the distribution of X? What is the probability that a situation no better than this will happen?
If they cannot sell defective products, and the price for each chip is 5 dollars, while the cost for each one is 1 dollar. Then what is the expected income on 1000 chips? (Suppose if the chip is good, it can be sold for sure)
Now if you doubt that the factory underestimates their defective rate, p, the based on the data you have in a), can you make any conclusion, if so what is it?