Question

The prices of some houses in a neighborhood are shown below:

House Price

A $120,000

B $130,000

C $140,000

D $150,000

E $1,110,000

Based on the data, should the mean or the median be used to make an inference about the price of the houses in the neighborhood?

A. Median, because there is an outlier that affects the mean

B. Mean, because there are no outliers that affect the mean

C.Median, because it is in the center of the data

D. Mean, because it is in the center of the data

Answer 1

By observing the data , it can be easily observed that the price of the house in option E differs significantly from the other options. Thus price of $1,110,000 is an outlier for this data.

Mean is used to make an inference in symmetrically distributed data. However the data given is not symmetrical due to the presence of an outlier. Thus mean will not represent the centre of the data. Therefore, we will not use mean to make an inference about the price of the houses.

Thus we will use median as it is not affected by the outliers.

So we will use median because there is an outlier that affects the mean. Option(A) is correct.

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