We use 317,000 emission-line galaxies from the Sloan Digital Sky Survey to investigate line-ratio selection of active galactic nuclei (AGNs). In particular, we demonstrate that star formation dilution by HII regions causes a significant bias against AGN selection in low-mass, blue, star-forming, disk-dominated galaxies. This bias is responsible for the observed preference of AGNs among high-mass, green, moderately star-forming, bulge-dominated hosts. We account for the bias and simulate the intrinsic population of emission-line AGNs using a physically-motivated Eddington ratio distribution, intrinsic AGN narrow line region line ratios, a luminosity-dependent Lbol/L[OIII] bolometric correction, and the observed Mbh-sigma relation. These simulations indicate that, in massive (log(M*/Msun) > 10) galaxies, AGN accretion is correlated with specific star formation rate but is otherwise uniform with stellar mass. There is some hint of lower black hole occupation in low-mass (log(M*/Msun) < 10) hosts, although our modeling is limited by uncertainties in measuring and interpreting the velocity dispersions of low-mass galaxies. The presence of star formation dilution means that AGNs contribute little to the observed strong optical emission lines (e.g., [OIII] and Ha) in low-mass and star-forming hosts. However the AGN population recovered by our modeling indicates that feedback by typical (low- to moderate-accretion) low-redshift AGNs has nearly uniform efficiency at all stellar masses, star formation rates, and morphologies. Taken together, our characterization of the observational bias and resultant AGN occupation function suggest that AGNs are unlikely to be the dominant source of star formation quenching in galaxies, but instead are fueled by the same gas which drives star formation activity.
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