Question

John’s rent is $1325. In his neighborhood, the average rent is $875 with a standard deviation of $219. Answer the following questions. Make sure to label your answers.

1) Would you consider John’s rent to be unusual? Why or why not?

2) What would John’s rent have to be for it to be considered an outlier?

Answer 1

Q1) Mean + 3*Standard Deviation

= 875 + 3*219 = 1532

John's rent here is 1325 < 1532, therefore the value here lies within the normal range and not outside 3 standard deviations of the mean. Therefore the given value is not unusual here.

Q2) For value to be unusual or an outlier, John's rent has to be outside 3 standard deviations of the mean.

Mean - 3*Standard Deviation = 875 - 3*219 = 218
Mean + 3*Standard Deviation = 875 + 3*219 = 1532

therefore a value is considered an outlier when the rent is less than $218 or greater than $1532.