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:

Interest Rates

The percentage of a sum of money charged for its use, determining the cost of borrowing money or the return on invested capital.

Compounded Annually

Compounded annually refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.

Land Rent

The price paid for the use of land or natural resources, determined by its location, productivity, and competing uses.

Interest Rate

The cost of borrowing money or the return on investment, expressed as a percentage of the amount borrowed or invested.