Average

Definition

The average is a measure of central tendency that represents the sum of all values in a dataset divided by the number of values. It provides a single value that summarizes the general magnitude of the data.

5 Must Know Facts For Your Next Test

1. The average is also known as the mean.
2. It is calculated using the formula: $$\text{Average} = \frac{\sum_{i=1}^{n} x_i}{n}$$ where $x_i$ are individual data points and $n$ is the total number of data points.
3. Averages can be affected by extreme values, or outliers, which can skew the result.
4. The average is different from the median and mode, which are other measures of central tendency.
5. In business statistics, averages are used to analyze trends, compare performance, and make predictions.

Review Questions

• How do you calculate the average of a dataset?
• What impact do outliers have on the average of a dataset?
• How does the average differ from other measures of central tendency like median and mode?

Related terms

Median: The middle value in a dataset when it is ordered from least to greatest. If there is an even number of observations, it is the average of the two middle numbers.

Mode: The value that appears most frequently in a dataset. A dataset may have one mode, more than one mode, or no mode at all.

Outlier: A data point that differs significantly from other observations in a dataset. Outliers can affect statistical measures such as mean and standard deviation.