Question

According to the U.S. Census Bureau, in 2011, the median sales price of new houses was $227,200, and the mean sales price was $267,900 (extracted from www.census.gov, June 25, 2012). Discuss the shape of the distribution of sales prices for new houses given the median and mean. Explain what this means about house pricesAccording to the U.S. Census Bureau, in 2011, the median sales price of new houses was $227,200, and the mean sales price was $267,900 (extracted from www.census.gov, June 25, 2012). Discuss the shape of the distribution of sales prices for new houses given the median and mean. Explain what this means about house prices.

Answer 1

Mean Price =   $267,900

Median Price = $227,200

Ans : This is an example of a skewed distribution example. Now Mean price is Higher than Median Price indicates right-sided skewed distribution channel.

Now looking at the Distribution Chart Area of Right side of Mean Price: There is a lower no of House.

Means Very few houses are there above the Mean price but Those prices are quite high. Presence of a small percentage of the costly house which increases the overall mean price of all house. Wher there is Higher no of Low Priced House below prices below mean price.

For Understanding, 30% of the Houses price are above Mean price whereas 70% of  the Houses price are below mean price.