Risk and Odds in Everyday Life, by James Burke, reports that only 2% of all local franchises are business failures. A Colorado Springs shopping complex has 137 franchises (restaurants, print shops, convenience stores, hair salons, etc.).

(a) Let r be the number of these franchises that are business failures. Explain why a Poisson approximation to the binomial would be appropriate for the random variable r. What is n? What is p? What is l (rounded to the nearest tenth)?

(b) What is the probability that none of the franchises will be a business failure?

(c) What is the probability that two or more franchises will be business failures?

(d) What is the probability that four or more franchises will be business failures?