Question

You are an associate of the American Coffee Producers Association and operate small coffee shops in southern Nevada. The coffee business is quite competitive and small companies must compete with coffee giants like Starbucks. Therefore, it is important that you understand your local market demographics. One demographic you wish to study is whether there are differences in coffee consumption levels among various age groups. Understanding any relationship between age and coffee consumption will help tailor effective promotional issues. You develop and administer a survey in your target market area. Two of the questions on the survey ask 1) the respondent's age range and 2) the respondent's level of daily coffee consumption. The results of the survey are shown in the table below. Perform the appropriate test at alpha = .05 to determine if the level of daily coffee consumption is related to customer age.

Respondent's Age Group:

Daily Consumption Level:	< 30 Years	30 to < 40 Years	40 < 50 Years	50 and Older
Low (less than 2 cups)	36	15	10	26
Moderate (2 to 3 cups)	32	30	24	24
High (more than 3 cups)	21	27	20	22

Answer 1

H0: Null Hypothesis: The level of daily coffee consumption is not related to customer age

HA: Alternative Hypothesis: The level of daily coffee consumption is related to customer age

Observed Frequencies:

Daily consumption level	< 30 Years	30 to < 40 years	40 to < 50 years	50 and older	Total
Low	36	15	10	26	87
Moderate	32	30	24	24	110
High	21	27	20	22	90
Total	89	72	54	72	287

Expected Frequencies:

Daily consumption level	< 30 Years	30 to < 40 years	40 to < 50 years	50 and older	Total
Low	89X87/287=26.98	21.83	16.37	21.83	87
Moderate	34.11	27.60	20.70	27.60	110
High	27.91	22.58	16.93	22.38	90
Total	89	72	54	72	287

Test statistic is calculated as follows:

Observed Frequency (O)	Expected Frequency (E)	(O - E)2/E
36	26.98	3.02
15	21.83	2.13
10	16.37	2.48
26	21.83	0.80
32	34.11	0.13
30	27.60	0.21
24	20.70	0.53
24	27.60	0.47
21	27.91	1.71
27	22.58	0.87
20	16.93	0.56
22	22.58	0.01
Total = =		12.91

So,

Test statistic = 12.91

Degrees of Freedom = (r - 1) X (c - 1)

                                 = (3- 1) X(4 - 1)

                                    = 2 X 3 = 6

By Technology, P- Value= 0.044489

Since P - Value= 0.044489 is less than = 0.05, the difference is significant. Reject Null Hypothesis.

Conclusion:
The data support the claim that The level of daily coffee consumption is related to customer age.