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In that town of 50 people the mean income is 129,400 and the median is 30,000. Which measure describes the centre better, and why?
AThe mean, because it uses all 50 incomes
BThe mean, because it exceeds the median
CThe median, because one income is an outlier
DThe median, because it is the smallest value
Answer & Solution
Correct answer: C. The median, because one income is an outlier
1. Forty-nine of the 50 incomes are 30,000 and only one is 5,000,000.
2. That single income is an outlier and it pulls the mean far above every ordinary earner.
3. The median of 30,000 matches what almost everyone in the town actually earns, so it is the better centre.
4. Using all 50 incomes is exactly what makes the mean vulnerable here, so it is not an argument in its favour.
_Source: OpenStax Introductory Business Statistics (CC BY 4.0), Ch 2 "Descriptive Statistics", section 2.3 Measures of the Center of the Data_
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