e,olJAflt: r ->o~

LE l~• XY Chartered Accountants analyzed the tax payments made by their

1 1Jl the previous year and wanted to test whether amount of tax paid and their income
Jell d pendent or not. Data collected by the firm are mentioned in the following table
itl e
.re 0-10,000 10,001.20,000 20,001-50,000 Above 50,000 Total
income (in
r Lak_h•H
/1-5 32
34
15 12 7 66
95
5-10 28 15 18
10-20 12 35 20 23 90
}J,oVe 20 10 11 13 15 49
..--:- 88 89 60 63 300
For drawing inferenee, use Chi-square test at 5% level of s1gmficance. 0 n the basis of the
jl){erence what advice should be given to the clients?
SOLUTION: H 0 : Income and tax paid are independent.
H0 : Income and tax paid are associated.
On the basis of the table given in the question, expected frequency table is calculated as

-
follows:
Taze•-t 0-10,000 10,001-20,000 20,001-50,000 Above 50,000
Total

rLakh•H
-
Income (in
1-5 19
28
20
28
13
19
14
20
66
95
5 -10 18 19 90
10- 20 26 27
14 10 10 49
Above 20 15
60 63 300
88 89
Total
Calculation of X2
E (O-Ei'IE
0 8.894
19
32 1.286
28 7.538
34
26 1.667
12 15
10 1.250
20 0.000
15 28
28 2.370
27 0.643
35 14
11 0.077
13 0.842
12 19 0.222
15 18 0.900
20 10 3.500
13 14 0.200
7 20 0.842
18 19 2.500
23 10 2 = 32.731
15 300
Total 300
 --- -.. :
y be
. ar e tab le ·value ·is 16.919. H0 ma
. red
to
59 0
4 - l) = 9;- a 0.~
5
; c: ;J :n ts will be ad vis ed to be pre . pa
_ (4 -
1) -
l)( .d are associate • .
df = (r - l)( c - om d tax pa1
• d us inc e an ho we re tes bl ted fo r cholesterol Wa s
fh igh er inc om e. of 7 5 me n w
reJyecteo • tax .'m case o 1
. th~ following ta e:
pa
cPLE 1 •
5 A rando
an
d ho
m sa mp
c
les ter
e • e1 m
ol }ev
Ch ole ste ro l Le ve l
-
~ cco rding to ag e
>20 0
To tal s -
17 5-2 00
<175 14 40
Ag e 16 35
10 18
<45 8
9 32 75
2!45
19
24 -
nd en t attributes. Ua·e
Totals d cholesterol level ar e in de pe
age an
Test the null hypothesis th at
nt
0.0 1. TION: Ho: Age and c o es
h 1 terol level are ind ep en de
a = SO LU e rel ate d
Ha: Age and cholesterol level ar
Expected frequency table is:
Ch ol es ter ol Le ve l
>2 00 Totals·
17 5-2 00
Ag e <1 75 17 40
10 13
<45 15 35
9 11
>45 32 75
19 24
Totals
2
Ca lcu lat ion of X
E (O-E)2 /E
0 0
10
10 0
9
9 0.6 92
16 13
11 0.8 18
8
17 0.5 29
14
15 0.6 00
18
2 = 2.6 39

tab le va lu e is 9.2 10 . Ho ma
y be
1; Ch i-s qu ar e
- l)( c - 1) = (2-1)(3-1 ) = 2; a 0.0
el ar e ind ep en de nt.
• Thus, age an d cholesterol lev
ted at ra nd om fro m 50 0 stu de nt s en ro lle d a ~o m~ ut
XAMPLE 16. 50 stu de nts seac lec followmg
e an d gr ad e po in ts giv ing th e
-
cla ssi fie d co rdi ng to ag
crash programme were
Ag e (in ye ar s)
Ab ov e3 0 _
Gr ad e Po in ts 20 an du nd er 21 -3 0
2
Up to 5.0
5.0 to 7.5
3
8
5
7 5 I
7.5 to 10.0 4 8 8
an d gr ad e po in ts ar e ind ep ende?1
e
2 _Te
st 5
at % lev el of sig nif
). icance th~ hy Po the sis th at ag
<x 1s 5.991 for 2 d.f . at 5%
 y •

~. -¥th;tHMtiffJii---·---.. . .---......;.
1 BiPlam the procedure of Chi-square test f . ·
Q• • W}lat is the Chi-square test ti . o independence. (DU M Com, 2008)
Q, 1• tbiB test can be used appropn:~~de pendence? State two business situations where
In a survey of 400 girls of whi h . (GGS IPU BBA Dec., 2008)
15
Q, S, l 70 of the un-intelligent girlschad Owere intelligent, 80 had educated mothers; while
bYJ>Othesis that educated mothers uned1;1ca~ mothers. Do these figures support the
of l d.f. at 5% level is 3.84). have intelligent girls? Use Chi-8quare test. (Value
•e jtll• • fx2 = 8.888; H O rejected)
4 The result of a certain survey h tha
Q, • JJlanaged by men of which s :::~ . out of 50 ordinary shops of small size 35 are
ti
t Can it be inferred that shops
17
::icities. 12 shops villages 1:'1° by women.
cities. Use Chi-Square test. run Y women are relatively more in villages than in
Anl· [x3 = 3.572; H 0 accepted)
Q. 5, In a survey _of 300 employee of an IT firm in Hyderabad, 180 were male of which 110
are ~arned. _100 female employees are married. Can you infer on the basis of the
above mformation that greater number of female employees is married than male
employees? Use Chi-square test at 5%.
Ans. [X2 = 57.92; H 0 rejected)
1 j~• To test the efficacy of a new drug, a controlled experiment was conducted wherein
W 300 patients were adroinist.ered the new drug and 200 other patients were not given
the drug. The patients were monitored and the results were obtained as follows:
Cured Condition zooraened Noeffecl Total
Given the drug 200 40 60 300
Not lriven the druj? 120 30 50 200
Total 320 70 110 500
Use Chi-Square test for finding the effect of the drug.

IGiven d.f.
x2at5%
I 1
3.84
I 5_!, 3
7.815

Ana. [x2 =2.434; H 0 accepted] th 1000 students enrolled in a MBA

' ~A"100 students randomly selected from
V" , •programme-w ere cross classified by age an.degrade points. Accordingly, the following
data were comp1iled••
Ag_einyears
i 25 and under
J6-28
- . 9
• OoerZB
5
Grade point• 8
6 14
Upto 3.0 8 17
3.1 to 3.5 1 12 and grade points are
11 othesis that age .
3.6to4.0 test the hYP .
ce
At 5% level of s1gnifi:S:0.05 X2 === 9.488)
independent (At 4 d.f.,
Ans. =
[x2 6.369; Ho accepted] .
592 2
Ca lcu lati on of X
(O-EYltE
E
0
45
40
34
51
56
3.5588
2.3725
2.1607
-----
--------
45 84 1.4405
95 x.2 = 9.5325
e tab le val ue 1s 3.841. H. may b
d~ r l)(c _ l) =(2 _ 1)(2 - 1) = 1; a 0.05; Chi -sq uar . e
. us educated fathers have inte llig ent boys. .
~& '
18. Ind ian Rai lwa ys ana lyz ed the dat a for 2~0 res erv atio ns on Pune _ DeJhi
IPLE
ds of res erv atio n and the cla ss of travel, It

-
ranto Express on the bas is of the me tho
obtained the following results:
Re ser vat ion Me tho d
Class of Travel Ag ent Int ern et Total
Cou nte r boo kin gs Bo oki ngs Th rou gh
28 31 22 81
-
AC II Tie r 29 119
45 45
AC III Tier 51
73 76 200
Total
ief tha t the cla ss of trav el is unrelated with
Test at 5% level of significance Railway's bel
the method used for reservation.
SOLUTION:
el are unr ela ted
H0: Method of reservation and the class of trav
el are rela ted
Ha : Method ofre serv atio n and the class of trav
Expected Dat a
Class of Tra vel Re ser vat ion Me tho d •
Co unt er Ag ent Int ern et Total
AC II Tier 30 31 20 81
ACID Tie r 43 45 31 119 -
Total 73 76 51 200 -
0
Ca lCul a t·10n of X;t
E (O-EJ2IE
------
28 0.133
30
45 0.093
43
31
31 0
45
45 0
22
20 0.200
29
31 0.129
0.555 ---d----
-
x.2=
2 si 15
x = o.555 d. f. - (r - 1) (c - 1) -
5 999 s
2
l-. - ( - l) (3 - 1) = 2· X, tab le
2 val ue for 2 d.f. an 13ted·
• • Ho ma y be accepted. Thu•• • , -•"' ,inre
m ..t ,..,:i -~-- •
 'Afl_Efr]TEST. 591
ts .
~ N : ·H . : Age an d gr ad e poin ar e independent•
Ha .• Age an.d gr ad e p • ts ar e associated
;,v om •
• e is :
~ te d fr eq ue nc y 4l bl

o,adepoints As!e (i n ye ar s) To ta l

:]
20 an d u n d er 21-30 Ab ov e 30
1.,...---;-;
GptD 5.0
5,0tD 7.5
·:] :] 10
20
20
6 8 6
5tD 10.0 50
1 15 20 15

Sin·ce the ex pe ct ed frw eq ue nc y in th e fi ~: o; an d t~ e first column is less th an 5,e

ar e clubbed w it ~s second row. Thewsa
eque?cies of th e, nu
m
. (re4uencies of th e fi rs t eroobserved da ta A s 1 ubbing mber of rows ill be
~ u re is do ne for th • a re su t of th is cl
to 2.
C al cu la ti on of X2
E (O-E)1/E
0
9 0.444
11 0.667
6
4 0.000
12
12 0.000
8
8 0.444
9
7 '6 0.667
8 x2 =2 .2 22
table valu e is 5.991. H 0 may be
1) = (2 - 1X 3 - 1) = 2;_ a 0.05; Chi-square
df = (r - l) (c - e independent.
ts ar
us , ag e an d gr ad e po in w er e
ated
intelligent, 45 have educ t·
22 5 bo ys, of w hi ch 85 suppor
LE 17 . In a su rv ey of boys have uneducated fathers. Do these figures
te lli ge nt
ers, while 95 of th e un in th er s ha ve intelligent boys? (CA P E - I, N ov 2005)
ed fa
lhe hyPothesis th at ed uc at nd en t; H : Attributes
are associated.
ut es ar e in de pe
SOLUTION: H 0 : A ttr ib
0

To ta l
Ta ble of O bs er ve d da ta (0 ) U n- in te lli ge nt bo ys
90
In te ll ig en t bo ys
r-- -._

,..__ 45 135
45 95
Educated fa th er s 225

I
40 140
~e du ca te d fa th er s 85
Tota1
To ta l
r---....:Ta:: ble of expected da ta (E
) U n, in te lli ge nt boys 90
In te ll ig en t bo ys 56 135
r---..._ 34 84 225
~u ca te d fa th er s 51 140
tJlleducated fa th er s
. 85
Totai
 594
of under-graduate and 300 students of post-graduate
Q. s. A sample of 3?0 s~uden~e asked to give their opinion towards autonomous colleges.
classes at a Uruversity we and 210 of the postgraduate students favoured the
190 of the under-gradua:: the above facts in the form of a frequency table and test
autonomous status. Pr~s~ f under-graduate and post-graduate students on
t 5% level that opm1ons o .
:utonomous status of colleges are mdependent.
An I 2 _ 3 o· H0 accepted] .
ted frequency for the following data presuming the two attributes
V
X - •'
. Calcula~.:;ie er::me and condition of the child as independent.
viz., con 1 on o
Condition of Home . -
Condition ofChild Clean Dirty
Clean 70 50
Fairly clean 80 20
Dirty 35 45
Use the Chi-Square test at 5% level to state whether the two attributes are
independent? (x2 at 5% and 2 d.f. = 5.991)
Ans. Ix" =24.639; H 0 rejected]
Q(Io. The following table gives the number of accounting clerks committing errors and not
V committing errors among trained and untrained clerks working in an organization:
No. of Clerks No. of Clerks not Total
committing errors committing errors
Trained 70 530 600
Untrained 155 745 900
Total 225 1275 1500
Test, whether trained accounting clerks commit less errors? Use Chi-Square Test at
5%.
Ans. [x2 = 8.714; H 0 rejected]
Q,{1. 160?~amilies were selecte~ at ~andom•in a city to test the belief that the high income
V families _usu~lly send their children to public school and low income families often
send their children to Government schools.
The following results were obtained·
School
Income Public
Low Government Total
494 506
Hi£h 1000
162 438
Total 600
656 944
Test whether • 1600 -
mcome and type of sch lin 95)
Ans. b:2 = 77.78; H. rejected] oo g are independent. (DU M Com 19
Q. 12. One thousand girls in a II .
conditions of their homeco 1.?e ~er.e graded according to their 1.Q. and the econollllc
between economic condi;~ set 1- test to find out whether there is any association
ns a ome and l.Q. of girls: