Question

You are making a report to your managers about the checking account balances for different customers.

For a sample of 60 customers, it was found that the mean account balance was $3,750 and the median was $4,011.

What does this imply? How can this information be useful to the managers of a business?

Answer 1

The mean tells us the average of the entire sample but it is affected by extreme values. The median tells us the Middlemost value in a sample so it is not affected by outliers. For a distribution in which median is greater than mean the distribution is negativity skewed. It tells us that the highest value or mode is greater than the Middlemost value.

Now we can conclude that the average account balances of 60 customers is 3750. While the balance of the person who is the middle most of this data is 4011. The highest value of the balance is greater than 4011. This tells us that the distribution of account balances of customers is negativity skewed. That means a number of customers have account balances less than the mean balance. All this information is important to the managers to make decisions about how much customers spend and formulate further plans accordingly.