Page 298 - qrps

Quantitative Reasoning & Problem Solving
298 © 2014 Pacific Crest
Step Watch it Work!
5. Compute the
measures of CT
and determine
which is best
Compute the mean: Compute the median:
Add the numbers in the data
set and divide by the number
of elements in the data set.
The sum of the elements in
the data set is 20027871.
There are 25 elements in the
data set, so
$2, 042, 2871
Mean
25
$816, 915
=
=
Put the elements of the
data set in order from low-
est to highest.
There are an odd number
of elements in this set so
there is one number in the
middle.
Median = $615,000
$199,900.00
$264,993.00
$289,000.00
$395,000.00
$420,000.00
$449,000.00
$495,000.00
$499,999.00
$549,000.00
$555,000.00
$585,000.00
$585,000.00
$615,000.00
$624,993.00
$709,000.00
$720,000.00
$1,199,000.00
$1,199,000.00
$1,199,993.00
$1,275,000.00
$1,299,000.00
$1,500,000.00
$1,549,993.00
$1,595,000.00
$1,650,000.00
Notice that the mean and median are not similar. Which number is more
important to the buyer? If half the houses are under $615,000, she will have
many choices at or under that price range. Relatively few houses cost more
than the mean of $816,915. So in this case the median is a much better
representative of central tendency.
The mode corresponds to the price that appears most often. In this example
$585,000 and $1,199,000 each appear twice. Both $585,000 and $1,199,000
are modes. The mode may not be useful in this context.
6. Validate In order to validate this study a second sample of list prices should be
examined.