A large company is interested in knowing whether there is any relationship betwe

Question

A large company is interested in knowing whether there is any relationship between a person’s age and that person’s opinion about a new wage incentive plan. A random sample of 100 employees was selected and crossclassified as shown below. Opinion Opposed Neutral In Favour Under 35 5 5 10 35 to 55 10 30 10 Over 55 15 10 5 10 marks At the 1% level of significance, can it be concluded that there is a relationship between an employee’s age and an employee’s opinion about the new wage incentive plan? Formulate and test the appropriate hypotheses. Use the critical value approach.

Explanation / Answer

This is the hypothesis test of chi-square for the test of independence

test statistics, chi-square = 17.351

df = 4

critical value = 13.2767

As test statistics is greater than critical value, we reject the null hypothesis. This means the relationship betweeen an employee's age and an employee's opinion about the the new wage incentive plan is not independent.

Observed Opposed in neutral in favor total Under 35 5 5 10 20 35 to 55 10 30 10 50 over 55 15 10 5 30 Total 30 45 25 100

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