Business Statistics For Dummies, 2nd Edition

Chapter 13

Applications of the Chi-Square Distribution

IN THIS CHAPTER

Introducing the chi-square distribution

Testing hypotheses about the variance of a single population

Implementing goodness of fit tests with the chi-square distribution

This chapter covers two types of hypothesis tests: tests about the population variance and goodness of fit tests. Goodness of fit tests determine whether a population follows a specified distribution, such as the normal distribution (for a thorough introduction to the normal distribution, see Chapter 9). Because many business applications rely on the assumption of normality, goodness of fit tests are particularly valuable.

To implement a goodness of fit test, you use a continuous distribution known as the chi-square distribution. This distribution has many interesting features, which I explain in detail and illustrate throughout this chapter; its properties are quite different from the normal distribution.

I also explain how to use a chi-square table to compute probabilities under the chi-square distribution, and I show you how to compute moments for the chi-square distribution. (Moments are summary measures of a probability distribution that ...