Question

You have been hired to test whether the demand for a product that your client produces varies between two demographic markets – the Urban and Rural markets.

As such, in each market, you run a short survey that gauges customers demand for your product and assigns them to one of three categories – (i) High (ii) Medium or (iii) Low.

You survey 70 people in the “Urban” market and find that their demand falls into the following “buckets”

High                       32

Medium                20

Low                        18

You survey 30 people in the “Rural” market time. Their demand for the product its reflected below.

High                       8

Medium               10

Low                       12

The Null hypothesis that you are asked to test is that "the demand for the product is INDEPENDENT of the whether the market is Urban or Rural.”

Assuming that you can tolerate no more than a 5% probability of a Type I error ("p" no larger than 0.05), what is the critical value for the Chi-Square test of the above hypothesis?

Answer 1

there will be two columns for urban and rural and three rows for high, medium and low

Degree of freedom = (number of rows-1)*(number of columns-1)

= (3-1)*(2-1)

= 2*1

= 2

using chi square table for df(2) and alpha (0.05)

we get

chi square critical value = 5.991