Use the Information Below to Answer the Questions

question 27

Multiple Choice

Use the information below to answer the questions.
A major car manufacturer was interested in whether its midsize car was selling consistently in two markets with respect to the annual income of the car purchasers. 500 new car buyers in Chicago and Miami were surveyed. In Chicago the following pattern was observed:

Among those surveyed in Miami, 20 earned under $20,000; 70 earned between $20,000 and $30,000; 265 earned between $30,000 and $40,000; 125 earned between $40,000 and $50,000; and 20 earned more than $50,000.
-Refer to Exhibit 12.3. The chi-square test was used to check whether Miami sales among income groups were consistent with Chicago's. The appropriate degrees of freedom for the chi-square test would be:

• A) 4
• B) 5
• C) 500
• D) 499
• E) None of the above.

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Definitions:

Effectiveness

The degree to which objectives are achieved and the extent to which targeted problems are solved.

Liquidity

A measure of the ease with which an asset can be converted into cash without significantly affecting its value.

Solvency

The ability of a company or individual to meet long-term financial obligations, indicating they possess more assets than liabilities over the long term.

Profitability

A measure of the efficiency and effectiveness of a company in generating profit from its operations.