Non parametric (Chi square distribution)
Suppose that there is interest in testing if there is any relationship between the scholastic achievement (final grade point average in college) of a business administration graduate and his or her level of income. The null hypothesis is: there is no relationship between scholastic achievement and the level of income, H1 states that there is a relationship. For this test, the 0.01 level of significance was selected.

It was decided to classify the scholastic achievement levels of the business administration grades into three groups: above average, average, and below average, represented by final grade point scores of 3.0-1.0, 2.5-2.9999, and 2.0-2.4999 respectively (2.0 is needed for graduation, and 4.0 indicates that a graduate had all A grades when in college).
The incomes of the 751 respondents were classified into four levels: low, lower middle, upper middle and high. The responses of the 751 graduates were tallied into a table.
SCHOLASTIC ACHIEVEMENT INCOME LEVEL LOW LOWER MIDDLE UPPER MIDDLE HIGH TOTAL
Above average 22 31 31 8 92
Average 67 80 73 17 237
Below average 124 161 122 15 422

Is there a relationship between scholastic achievement and level of income? Test this relationship at a 1% level of significance. (Table value: Chi square with 6 df at 0.01 level of significance = 16.81189)

Probability distribution - Continuous
Mercedes Goes after Younger Buyers

Background
• Mercedes and BMW (Bayerische Motoren Werke) compete in the luxury car segment
• 1959 BMW was bankrupt but in 1992 it overtook Mercedes in sales
• Reasons for success
• Luxurious models
• Consumer quality
• Environmental responsibility
• Younger customers – refinement and comfort
• Focus on performance and driving dynamics
• Coupe – 330ci - $34990 – 30 miles per gallon (highway) and 20mpg (town)
• Mercedes
• Changing