Problem-Solving and Data AnalysisEasyRecognising a misleading average
Problem-Solving and Data Analysis practice question
A company reports that the average salary of its 10 employees is $90,000. Nine of the employees earn $40,000 each and the owner earns $540,000. Which statement best describes the reported average?
- A. The mean is pulled up by one very high salary and does not represent a typical employee.Correct
- B. The mean shows that most employees earn about $90,000.
- C. The mean was calculated incorrectly.
- D. The mean is lower than every employee's salary.
Answer: A. The mean is pulled up by one very high salary and does not represent a typical employee.
One outlier lifts the mean far above the typical $40,000.
Why the other answers are wrong
- B. The mean shows that most employees earn about $90,000.
- Nine of ten earn far less.
- C. The mean was calculated incorrectly.
- (9 × 40,000 + 540,000)/10 = 90,000 is correct.
- D. The mean is lower than every employee's salary.
- The owner earns more than the mean.
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