Question

Pelican stores claim that the proportion of sales coming from specific credit card transactions is distributed as follows: American Express – 5%, Discover – 10%, Mastercard – 15%, Visa – 15%, and Pelican Card – 55%. Use the Pelican Stores data to test whether the credit card transactions fit this distribution. Test using a level of significance of α = 0.05.

H0:                               Level of significance (α): α =  

HA:                               Type test: two-tailed left tail right tail

Specify the random variable and distribution to be used in this hypothesis test.

Calculate the p-value            Draw a graph and show the p-value
Show your work and any calculator functions used.

Compare the p-value with α. Decide to Reject or Fail to reject the null hypothesis      

Conclusion. State your results in non-technical terms.

Total transactions = 100

Pelican card: 43

Visa: 17

Mastercard: 17

Discover: 15

American express: 8

Answer 1

Ans:

H₀: The credit card transactions fits specified distribution.

Ha: The credit card transactions does not fit specified distribution.

Level of significance (α): α = 0.05

Right tailed test

Chi square distribution

	Observed,fo	pi	Expected,fe	(fo-fe)^2/fe
American	8	0.05	5	1.800
Discover	15	0.1	10	2.500
Mastercard	17	0.15	15	0.267
Visa	17	0.15	15	0.267
Pelican	43	0.55	55	2.618
Total	100	1	100	7.452

Test statistic:

chi square=7.452

df=5-1=4

p-value=CHIDIST(7.452,4)=0.1138

As,p-value>0.05,Fail to reject the null hypothesis