Question

A large department store examined a sample of the 18 credit card sales and recorded the...

A large department store examined a sample of the 18 credit card sales and recorded the amounts charged for each of three types of credit cards: MasterCard, Visa, and Discover. Six MasterCard sales, seven Visa, and five Discover sales were recorded. The store used an ANOVA to test if the mean sales for each credit card were equal. What are the degrees of freedom for the F statistic?

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Answer #1

Degress of freedom of F statistic is given by n-k.

n= number of observations=18=3

Degrees of freedom=15

k= number of coefficients including intercept coefficient

In such type of questions it is advisable to use dummy variable taking value 0 in absence of the attribute and taking value 1 in presence of the attribute.

Y(sales)=bo+D1Mastercard+D2Visa

D1= 1 if mastercard, 0 otherwise

D2= 1 if Visa, 0 otherwise

Eg: In case of Discover the equation will reduce to Y=bo

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