Question

There are six households in a rural community. Each household earns $40,000 per year. Suppose that a new resident builds a mansion in the community and that the income in the new household is $4 million per year. After the new resident arrives, the median household income has _____, and the mean household income has _____. increased; increased not changed; increased not changed; not changed increased; not changed

Answer 1

Median income has not changed

Mean income has increased

Explanation:

Initial number of houses = 6

Earning per household = $40,000

The initial mean :

$(40,000 * 6) / 6 = $40000

Initial median :

40000, 40000, 40000, 40000, 40000, 40000

= 1/2(n+1)th term,

Median = 40000

A 7th household earns 4,000,000

Mean = ((40000*6) + 4,000,000) / 7 = $605,714

Median = 1/2(n+1)th term

40000, 40000, 40000, 40000, 40000, 40000, 4000000

Median = 4th term = 40000