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Question 3

A large firm has established what it hopes is an objective system of deciding on annual pay increases for its employees. The system is based on a series of evaluation scores determined by the supervisors of each employee. Employees with scores above 80 receive a merit pay increase, those with scores between 50 and 80 receive the standard increase, and those below 50 receive no increase. The firm designed that plan with the objective that, on the average, 25% of its employees would receive merit increases, 65% would receive standard increases, and 10% would receive no increase. After one year of operation using the new plan, the distribution of pay increases for the company employees was as shown in the following table:

Distribution of Pay increases

# employees

None

42

Standard

365

Merit

193

Use= 0.01 to determine whether these data indicate that the distribution of pay increases differs significantly from the proportions established by the firm.

I.The type of hypothesistest(lower-tailed,upper-tailed,two-tailed)toconduct for this study is:

II.The value of the test statistics to conduct the test is:

III The critical value obtained from the table is:

IV.The conclusion for this test is(Reject Ho,Fail to Reject Ho):

V.Can we conclude thatthe distribution of pay increases differs significantly from the proportions established by the firm(Yes,Insufficient evidence)?: