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Goody Mattress and Furniture Company: Chi square test

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Goody Mattress and Furniture Company wishes to study the number of credit applications received per day for the last 300 days. The info is reported as follows:

#of credit Frequency National stats
applications
0 100 95
1 154 165
2 162 152
3 96 102
4 62 57
5 or more 26 29

at the 0.02 significance level:

a) state the decision rule
b) compute the value of the chi-squared
c) what is the decision regarding h0?

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Solution Summary

The solution includes step-by-step explanation of the chi-squared test.

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Please find the attached answer.

Number of credit applications Frequency National stats
100 95
154 165
162 152
96 102
62 57
26 29

a. State the decision rule:

Step 1. Find the degrees of freedom.
The formula used to find the degrees of freedom for chi-square test is: (number of columns - 1) * (number of rows - 1)

Thus, degrees of freedom for the current chi square test is: (2-1)*(6-1)=5

Step 2. Find the critical chi square value for 5 degrees of freedom at the 0.02 significance level. Because goodness of fit tests are right tailed, we will find the critical chi square value for a right-tailed test.

The ...

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