ABCDEFGHIJKLMNOPQRSTUVWXYZ
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Given Dataalpha =0.05
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3 or More Bedrooms
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House PriceYesNoRounding Precision =6
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Less than $300K344499
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$300-450K190334
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$450-600K133293
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Compute Row and Column Totals
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3 or More Bedrooms
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House PriceYesNoTotal
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Less than $300K344499843
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$300-450K190334524
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$450-600K133293426
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Total66711261793
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Use the command SUM to add values quickly
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Compute Expected Values for each cell
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For example, we expect the value 313.597881 in row1,column1 since:
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E = (rowTotal*columnTotal)/N
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E = (843*667)/1793
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E = 313.59788064696
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E = 313.597881
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3 or More Bedrooms
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House PriceYesNo
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Less than $300K313.597881529.402119
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$300-450K194.929169329.070831
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$450-600K158.47295267.52705
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Compute [ (Observed-Expected)^2 ]/[ expected ]
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Example: ((O-E)^2)/E=((344-313.597881)^2)/313.597881 =2.94737 for row1,column1
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3 or More Bedrooms
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House PriceYesNo
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Less than $300K2.947371.745911
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$300-450K0.1246440.073834
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$450-600K4.0945232.425441
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r = 3 rows, c = 2 columns
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degrees of freedom = df = (r-1)*(c-1) = (3-1)*(2-1) = 2
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ChiSquare Test Statistic =
11.411723
which is the sum of all the items in the table above
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ChiSquare Critical Value
5.991
by using the function CHIINV; or use ChiSquare table
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Test statistic 11.411723 is greater than the critival value 5.991
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Are we in the
rejection region?		Yes
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Decision: Reject the null
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P-value0.003326
Use the command CHIDIST
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P-value 0.003326 is less than alpha = 0.05
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End of PageDecision: Reject the nullEnd of Page
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