Question

The monthly household incomes of 8 families are given as:
{45000, 50000, 75000, 60000, 48000, 54000, 68000 and 150000}

Find the average income. Does the mean income give a fair idea of the average household income?

Answer 1

Mean household income = $\frac{SumofIncomes}{NumberofHouseholds}$

= $\frac{45000+50000+75000+60000+48000+54000+68000+150000}{8}$

= $\frac{550000}{8}$

= 68750

If we don't take the final value into consideration, since it is way above the rest of the households, we get :

Mean = $\frac{45000+50000+75000+60000+48000+54000+68000}{7}$

= 57142.85, which is 11607 less than the mean income if taken for all 8 households.

6 values of incomes out of 8 lie below the mean, which means this is not a correct projection for the Average.

Thus, the mean income does not give a fair idea of the average household income for this data.