Question

Suppose that you are about to purchase a car and have narrowed your choices to two models --Model A and Model B. All things are about equal, such as price, options, even the average annual maintenance costs. You find an owner survey in an auto magazine that indicates that the standard deviation of maintenance costs is smaller for Model B. Based on this information, which of the following statements is most appropriate?

A. Model B with the smaller standard deviation is preferable, because the smaller value implies that the mean is a more reliable representation of maintenance costs.
B. Model A with the larger standard deviation is preferable. Cecause the larger value implies a smaller amount of variation in the data
C. Neither of the models are good since both standard deviations are not equal to 0. B 2
D. They are equally acceptable, because standard deviations are not useful for comparisons of data sets.
E. Cannot determine based on the information provided.

Answer 1

A. Model B with the smaller standard deviation is preferable, because the smaller value implies that the mean is a more reliable representation of maintenance costs.

Explanation:

The standard deviation is a measure of the variability of a dataset about a mean value. Larger values of standard deviation implies that the values varies Hugely about the mean whole smaller variability measure values mean that the data only varies a little about the mean. The implication of having a large variability value is that, low and high values in the data can be very different from the mean values, hence, lowering the reliability of Mean value. The lesser varibality gives the mean more reliability as a measure of centre