Question

1. The Quality Control Department at a local supermarket conducts a monthly check on the comparison of scanned prices to posted prices. The chart below summarizes the results of a sample of 500 items last month. Company management would like to know whether there is any relationship between pricing errors and the type of price (regular or special). Use an alpha value of .01.

   Price Error                     Regular Price       Special Price          Total

   Undercharge                          20                           10                        30

   Overcharge                            15                          30                        45

   No Error                              200                          225                      425

   Total                                   235                         265                      500

   Which of the following is the correct statement of the Null Hypothesis for this question?

   		H0: π 1 = π 2 = π 3
   		H0: There is a relationship between errors and type of price
   		H0: There is no relationship between errors and type of price
   		H0: Error and Price are dependent

5 points   

QUESTION 2

1. Using the information from the previous question:

   If the calculated value of Chi-Square is 8.032, the null hypothesis should be rejected.

   True

   False

Answer 1

1) The null hypothesis will be

H0: There is no relationship between errors and type of price, ie they are independent to each other.

2) If the calculated value of Chi-Square is 8.032

using critical value approach. at alpha=0.01 and degree of freedom (3-1)*(2-1)=2, the tabulated value of chi square will be 9.210 which is greater than calculated value.

Null hypothesis can not be rejected.

so the statement is false.

using p value approach also

The P-Value is 0.018, alpha is 0.01

The result is not significant as p value is not less than  .01.

so again Null hypothesis can not be rejected.