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At a startup, nine employees earn $40,000 each and the founder earns $400,000. Which statement about the ten salaries is accurate?
AThe mean is $40,000 and the median is $76,000
BThe mean is $76,000 and the median is $40,000
CThe mean and the median are both $76,000
DThe mean is $44,000 and the median is $40,000
Answer & Solution
Correct answer: B. The mean is $76,000 and the median is $40,000
1. Compute the mean: add all ten salaries and divide by 10.
2. The total is 9 x $40,000 + $400,000 = $360,000 + $400,000 = $760,000.
3. Divide: $760,000 / 10 = $76,000, so the mean is $76,000.
4. For the median, order the ten salaries; the 5th and 6th values are both $40,000.
5. Their average is $40,000, so the median is $40,000.
6. The single $400,000 outlier drags the mean far above the typical salary while leaving the median untouched.
7. Option A swaps the two measures, and option C pretends the outlier moves both equally.
8. Option D, $44,000, divides the founder's extra pay by 100 instead of 10, a decimal slip in the mean.
_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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