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A tax preparation company randomly selects 300 adults and asks them how they pre

ID: 3314685 • Letter: A

Question

A tax preparation company randomly selects 300 adults and asks them how they prepare their taxes. The results are shown at the right. Find the expected frequency for each tax preparation method. Perform a chi-square goodness-of-fit test to test whether the distributions are different. Use = 0.01.

Tax Preparation method

% of people

Observed frequency

Expected frequency

Accountant

25%

71

By hand

20%

40

Computer software

35%

101

Friend/family

5%

35

Tax preparation service

15%

53

Tax Preparation method

% of people

Observed frequency

Expected frequency

Accountant

25%

71

By hand

20%

40

Computer software

35%

101

Friend/family

5%

35

Tax preparation service

15%

53

Explanation / Answer

Ans:

H0:the distributions are equal.

Ha: the distributions are different.

Test statistic:

calculated chi square score=35.121

df=5-1=4

p-value=CHIDIST(35.121,4)=0

As,p-value<0.01,we reject null hypothesis.

There is sufficient evidence to conclude that the distributions are different.

Tax Preparation method % of people Observed frequency Expected frequency (O-E)^2/E Accountant 25% 71 75 0.213 By hand 20% 40 60 6.667 Computer software 35% 101 105 0.152 Friend/family 5% 35 15 26.667 Tax preparation service 15% 53 45 1.422 Total 100% 300 300 35.121
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