Question

In: Statistics and Probability

Note: Please write down the formulas clearly. Thank you The office occupancy rates were reported for...

Note: Please write down the formulas clearly. Thank you

The office occupancy rates were reported for four California metropolitan areas.
Do the following data suggest that the office vacancies were independent of the metropolitan area?
Run a hypothesis test at alpha of 0.05. What is your conclusion?
Observed Frequencies
Occupancy Status/Metropolitan Area Los Angeles San Diego San Francisco San Jose Total
Occupied 160 116 192 174 642
Vacant 40 34 33 26 133
Total 200 150 225 200 775

Solutions

Expert Solution

Null hypothesis : Ho : Office vacancies were independent of the metropolitan area

Alternate Hypothesis : Ha : Office vacancies were not independent of the metropolitan area

Test Statistic :

O : Observed Frequency

E: Expected Frequency

Expected Frequencies
Occupancy Status/Metropolitan Area Los Angeles San Diego San Francisco San Jose Total
Occupied (642*200)/775 (642*150)/775 (642*225)/775 (642*200)/775 642
Vacant (133*200)/775 (133*150)/775 (133*225)/775 (133*200)/775 133
Total 200 150 225 200 775
Expected Frequencies
Occupancy Status/Metropolitan Area Los Angeles San Diego San Francisco San Jose Total
Occupied 165.6774 124.2581 186.3871 165.6774 642
Vacant 34.3226 25.7419 38.6129 34.3226 133
Total 200 150 225 200 775
O E O-E (O-E)2 (O-E)2/E
160 165.6774 -5.6774 32.2331 0.1946
40 34.3226 5.6774 32.2331 0.9391
116 124.2581 -8.2581 68.1956 0.5488
34 25.7419 8.2581 68.1956 2.6492
192 186.3871 5.6129 31.5047 0.1690
33 38.6129 -5.6129 31.5047 0.8159
174 165.6774 8.3226 69.2653 0.4181
26 34.3226 -8.3226 69.2653 2.0181
Total 7.7528

Test Statistic :

Degrees of freedom = (number of rows -1)*(Number of columns - 1) = (2-1)*(4-1) = 3

for 3 degrees of freedom ,

As p-value : 0.0514 > level of significance : : 0.05 ; Fail to reject the null hypothesis.

These is not sufficient for the data to suggest that the Office vacancies were not independent of the metropolitan area.

p-value is computed using the excel function : CHISQ.DIST.RT

CHISQ.DIST.RT function

Returns the right-tailed probability of the chi-squared distribution.

The χ2 distribution is associated with a χ2 test. Use the χ2 test to compare observed and expected values. For example, a genetic experiment might hypothesize that the next generation of plants will exhibit a certain set of colors. By comparing the observed results with the expected ones, you can decide whether your original hypothesis is valid.

Syntax

CHISQ.DIST.RT(x,deg_freedom)

The CHISQ.DIST.RT function syntax has the following arguments:

  • X     Required. The value at which you want to evaluate the distribution.

  • Deg_freedom     Required. The number of degrees of freedom.


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