Chi-square test 115 ptsl Franchise rade will not have to compete with other outl

Question

Chi-square test 115 ptsl Franchise rade will not have to compete with other outlets of the same chain within its own territory. A outlet the fom of 170 new franchises recorded two categorical variables for each firm: (1) whether this biesses are sometimes given an exclusive territory by contract. This mea firm wa exclusive-ter sucessful or not (based on economic criteria) and (2) whether or not the firm had an ciate with the ritory contract. How does the presence of an exclusive-territory clause in the contract e survival of the business? (Use 3.84 as critical value) Exclusive territory Success Yes Yes NoTotal 108 34 142 15 13 28 123 47 170 Total

Explanation / Answer

here we use chi-square test with

null hypothesis H0:Exclusive territory and success are independent

alternate hypothesis H1:Exclusive territory and success are not independent

chi-square=sum((O-E)2/E)= 5.91 with (r-1)(c-1)=(2-1)*(2-1)=1 df

critical chi-square(0.05,1)=3.84 is less than calculated chi-square=5.91. so we reject H0 , we can say that exclusive -territory clause is success of survival of business

Observed(O) Expected (E) E (O-E) (O-E)2/E 108 123*142/170 102.74 5.26 0.27 34 47*142/170 39.26 -5.26 0.70 15 123*28/170 20.26 -5.26 1.37 13 28*47/170 7.74 5.26 3.57 sum= 170 0 170 7.99E-15 5.91

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