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    Chi square test for association: Finance & Income Range

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    A random sample of 100 people were asked if their finances were worse, the same or better than this time last year. The sample was split according to their annual income and the results are shown in the table below.
    Annual income Worse Same Better
    Under £ 15000 14 11 9
    £ 15000 and above 17 20 29

    Test, at the 5% level of significance, whether or not the relative state of their finances is independent of their income range. State your hypotheses and show your working clearly.

    See attached file.

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    Solution Preview

    Please see the answers

    H0: There is no association between income and finacial status .
    H1: There is association between income and finacial status .
    The test statistic used is Chi sqaure test.
    Where E is the expected freequcny and O is the Expected freequency ...

    Solution Summary

    The solution provides step by step method for the calculation of chi square test for association. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.