When Performing a Chi-Square Goodness-Of-Fit Test, Why Do Large Values

question 4

Essay

When performing a chi-square goodness-of-fit test, why do large values of the test statistic suggest that the variable does not have the distribution stated in the null hypothesis? Refer to the formula for the test statistic in your explanation.

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Definitions:

Variable Cost

Costs that change in proportion with the level of production or business activity, such as materials and labor directly involved in production.

Activity

Refers to any action or task performed within an organization that consumes resources.

Relevant Range

The range of activity over which a company expects its operating assumptions, such as cost behavior and sales mix, to remain valid, influencing budgeting and financial planning.

Fixed Costs

Costs that do not vary with the level of production or business activity, remaining constant even when output changes.