Question

The price of some houses in a neighborhood are shown below: House Price A $120,000 B $130,000 C $140,000 D $150,000 E $1,110,000 Based on the data, should the mean or the median be used to make an inference about the price of the houses in the neighborhood?

Answer 1

To infer a price for the houses in that neighborhood, it is better to use the median.

Explanation:

We have the following prices:

$ 120,000

$ 130,000

$ 140,000

$ 150,000

$ 1,110,000

Now, if we do it for the median, it is the best option, because there is a very distant value and the median is not much affected. The value that is inferred through the average is $ 140,000, a value close to the first 4 houses.

If we do it by the mean, the value would be:

(120,000 + 130,000 + 140,000 + 150,000 + 1,110,000) / 5 = $ 330000

a value very far from all the prices of the houses, this is due to the value so far from the last house.

In other words, to infer a price for the houses in that neighborhood, it is better to use the median.