Question

3. One of the content guides talked about mean, median and mode. Find the mean and median of the following data set of house values in a neighborhood: $25,000, $50,000, $60,000, $180,000, $100,000, $130,000, $170,000, $200,000, $125,000, $240,000, $190,000, $1,000,000. What is a more informative measure of the average prices of homes on this street? Why?

Answer 1

1. Mean = (25,000+50,000+60,000+180,000+100,000+130,000+170,000+200,000+125,000+240,000+190,000+1,000,000)/12

Mean = $205,833.33

2. For calculating median we will first have to arrange the numbers in ascending order as below:

25,000
50,000
60,000
1,00,000
1,25,000
1,30,000
1,70,000
1,80,000
1,90,000
2,00,000
2,40,000
10,00,000

Now for calculating the median we divide total count of numbers by 2: (12/2) = 6

Since we are getting an even number, we will take average of two middle numbers highlighted in bold in table above.

Hence, median = ($130,000 + $170,000)/2 = $150,000

3. Median is a more informative measure of the average prices of homes on this street. This is because median is a better representative of the population. We can see that the population is not homogeneous, i.e., we have a number as low as $30,000 whereas the highest number is as high as $1,000,000. Hence median which is average of all the values is not a true representative of the population.