Answer :
In this context, the median is a more informative measure of the average prices of homes on this street. It represents the middle value and is less sensitive to extreme outliers
Answer:
Due to the outlier, median ($150,000) better reflects typical house prices in this neighborhood than mean ($205,833.33).
Step-by-step explanation:
Finding Mean and Median House Prices
Mean (average):
Add all the house prices and divide by the number of houses:
Mean = (25,000 + 50,000 + 60,000 + 180,000 + 100,000 + 130,000 + 170,000 + 200,000 + 125,000 + 240,000 + 190,000 + 1,000,000) / 12 houses
= 2470000/12
= 205833.33333333
= 205833.33
Median:
Order the house prices from lowest to highest:
25,000, 50,000, 60,000, 100,000, 125,000, 130,000, 170,000, 180,000, 190,000, 200,000, 240,000, 1,000,000
Since we have 12 houses (even number), the median is the middle value:
Middle value is: 6th term and 7th term
which is: 130,000 and 170,000
We can find the median by dividing the sum of 6th and 7th term by 2.
Median = (130,000+170,000)/2
=300,000/2
= 150,000
More Informative Measure: Median
In this case, the median (150,000) is a more informative measure of the average house price on this street compared to the mean (205,833.33).
Reasoning:
The data set has a significant outlier, which is the $1,000,000 house price.
The mean is sensitive to outliers and gets skewed towards the extreme value.
The median, however, is not affected as much by outliers and provides a better representation of the "typical" house price in the neighborhood, which is likely closer to $150,000.
Conclusion:
While the mean can be useful in some cases, the presence of an outlier makes the median a more reliable indicator of the central tendency (average) for house prices in this neighborhood. The median represents the price point where half the houses are more expensive and half are less expensive.
