A LITTLE MORE PRACTICE

A large financial institution wanted to know which options were most important to small businesses. The financial

institution hypothesized that the options that businesses found important would vary as annual sales of the business

varied. The financial org

anization set up a cross

$-$

tabulation to

see if the options that are most important

depend on

the type of

business.

Null Hypothesis: Importance and Business Type are independent.

The following table lists the

number of businesses that reported each of the op

tions as most important.

Annual Sales

Option

$$ $$2$ million

$>=$

$$2$ million

Checking Account

$50$

$30$

Mutual Fund

$10$

$70$

$1.$

How many degrees of freedom do we have?

$2.$

What is the critical value at

$\backslash$alpha

$=\mathrm{.}05($see table to the right$)?$

$3.$

Calculate the expected values

and do a Chi

$-$

Square test: