economics/
measures-of-central-tendency

CLASS 11-HUMANITIES . ECONOMICS . STATISTICS FOR ECONOMICS . MEASURES OF-CENTRAL-TENDENCY

Chapter 5 : Measures of Central Tendency

Ch 5

ECONOMICS

CLASS 11-HUMANITIES

Measures of Central Tendency: Arithmetic Mean

Concept Explanation: Arithmetic Mean is the average of a set of numbers, calculated by dividing the sum of all observations by the total number of observations. It represents a central value of the data set.

Key Definitions / Features:

  • Mean: \( \bar{x} = \frac{\sum x}{N} \), where \(x\) are observations and \(N\) is the number of observations.
  • Objectives of Statistical Average: To summarize data, facilitate comparison, infer about population from sample, trace mathematical relationships, and aid decision making.
  • Essentials of a Good Average: Rigidly defined, representative, easy to understand, stable against sampling fluctuations, absolute number, algebraically treatable, unaffected by extreme values, and easy to compute.
  • Kinds of Statistical Average: Mathematical Averages and Positional Averages.
  • Types of Arithmetic Mean: Simple Arithmetic Mean, Weighted Arithmetic Mean, Combined Mean.

Methods of Calculating Simple Arithmetic Mean:

For Individual Data Series:

  • Direct Method: \( \bar{x} = \frac{\sum x}{N} \)
  • Shortcut Method: Choose an assumed mean \(A\), calculate deviations \(dx = x - A\), then \( \bar{x} = A + \frac{\sum dx}{N} \)
  • Step Deviation Method: Choose a common factor \(C\), calculate \( d' = \frac{x - A}{C} \), then \( \bar{x} = A + \frac{\sum d'}{N} \times C \)

For Discrete Series:

  • Direct Method: \( \bar{x} = \frac{\sum f x}{\sum f} \), where \(f\) is frequency.
  • Shortcut Method: \( \bar{x} = A + \frac{\sum f dx}{\sum f} \)
  • Step Deviation Method: \( \bar{x} = A + \frac{\sum f d'}{\sum f} \times C \)

For Continuous Series:

  • Calculate mid-values of class intervals.
  • Apply Direct, Shortcut, or Step Deviation methods similarly using mid-values and frequencies.

Calculation in Cumulative Frequency Distribution: Convert cumulative frequency to normal frequency distribution and apply any of the above methods.

Combined Arithmetic Mean:

For two groups with means \( \bar{x}_1, \bar{x}_2 \) and sizes \( N_1, N_2 \):

\[ \bar{x} = \frac{N_1 \bar{x}_1 + N_2 \bar{x}_2}{N_1 + N_2} \]

Weighted Arithmetic Mean:

When items have different importance, weights \(W\) are assigned:

\[ \bar{x}_w = \frac{\sum W x}{\sum W} \]

Properties of Arithmetic Mean:

  • Mean changes proportionally if all observations are increased, decreased, multiplied, or divided by a constant.
  • Sum of deviations from the mean is zero.
  • Sum of squared deviations from the mean is minimum compared to any other value.

Illustrative Example:

Calculate the mean of data: 5, 7, 9, 10, 12 using Direct Method.

\[ \bar{x} = \frac{5 + 7 + 9 + 10 + 12}{5} = \frac{43}{5} = 8.6 \]

Practice Set:

  • Level 1: Find the arithmetic mean of 3, 6, 9, 12.
  • Level 2: Calculate the weighted mean of marks where weights are credits.
  • Level 3: Given two groups with means and sizes, find combined mean.

Answer Key:

  • Level 1: Mean = (3+6+9+12)/4 = 7.5
  • Level 2: Use formula \( \bar{x}_w = \frac{\sum W x}{\sum W} \)
  • Level 3: Use combined mean formula.

Quick Reference: Arithmetic Mean formulas and methods summarized above.

Glossary:

  • Mean: Average value.
  • Frequency (f): Number of occurrences.
  • Assumed Mean (A): Reference value for shortcut methods.
  • Step Deviation (d'): Scaled deviation for simplification.

Measures of Central Tendency: Median (M)

Concept Explanation: Median is the middle value in an ordered data set that divides the data into two equal halves.

Key Definitions / Features:

  • Median: The value at position \( \frac{N+1}{2} \) for odd \(N\), or average of values at positions \( \frac{N}{2} \) and \( \frac{N}{2} + 1 \) for even \(N\).
  • Merits: Easy to calculate, unaffected by extreme values, certain, suitable for qualitative data, graphical representation possible.
  • Demerits: Requires data ordering, lacks algebraic treatment, less representative, affected by sampling.

Calculation Methods:

Individual Series: Arrange data in order and find middle value(s) as per odd/even count.

Discrete Series: Use cumulative frequency and formula:

\[ \text{Median} = L + \left( \frac{\frac{N}{2} - F}{f} \right) \times h \]

Where:

  • \(L\) = lower boundary of median class
  • \(N\) = total frequency
  • \(F\) = cumulative frequency before median class
  • \(f\) = frequency of median class
  • \(h\) = class width

Continuous Series: Convert inclusive to exclusive series, find cumulative frequency, then apply above formula.

Graphic Method: Median can be found using ogive (cumulative frequency curve) by locating \( \frac{N}{2} \) on frequency axis and projecting to data axis.

Other Partition Values: Quartiles, deciles, and percentiles divide data into more parts.

Illustrative Example:

Find median of data: 3, 5, 7, 9, 11.

Ordered data count \(N=5\) (odd), median position = \( \frac{5+1}{2} = 3^{rd} \) value = 7.

Practice Set:

  • Level 1: Find median of 2, 4, 6, 8, 10.
  • Level 2: Calculate median for grouped data using formula.
  • Level 3: Determine median graphically from ogive.

Answer Key:

  • Level 1: Median = 6
  • Level 2: Apply formula with given frequencies.
  • Level 3: Use ogive to find median value.

Quick Reference: Median formulas and steps summarized above.

Glossary:

  • Median Class: Class interval containing median.
  • Cumulative Frequency (F): Sum of frequencies up to a class.
  • Class Width (h): Difference between upper and lower class boundaries.

Measures of Central Tendency: Mode (Z)

Concept Explanation: Mode is the value that occurs most frequently in a data set.

Key Definitions / Features:

  • Mode: Observation with highest frequency.
  • Calculated by inspection in individual series.
  • For discrete and continuous series, use Grouping and Analysis Table to identify modal class.

Grouping and Analysis Table: Six columns are prepared to analyze frequencies in pairs and groups to identify modal class.

Mode Formula for Continuous Series:

\[ \text{Mode} = L + \left( \frac{f_1 - f_0}{2f_1 - f_0 - f_2} \right) \times h \]

Where:

  • \(L\) = lower limit of modal class
  • \(f_1\) = frequency of modal class
  • \(f_0\) = frequency of class preceding modal class
  • \(f_2\) = frequency of class succeeding modal class
  • \(h\) = class width

Illustrative Example:

Given class intervals and frequencies, identify modal class and calculate mode using formula.

Practice Set:

  • Level 1: Identify mode from individual data.
  • Level 2: Use grouping table to find modal class.
  • Level 3: Calculate mode for grouped data using formula.

Answer Key:

  • Level 1: Mode is the value with highest frequency.
  • Level 2: Prepare grouping table and identify modal class.
  • Level 3: Apply mode formula with given frequencies.

Quick Reference: Mode calculation steps and formula summarized above.

Glossary:

  • Modal Class: Class interval with highest frequency.
  • Grouping Table: Frequency analysis tool to identify mode.

Key Words

  • Average: A single value representing the entire data set, located centrally.
  • Arithmetic Mean: Sum of observations divided by number of observations.
  • Median: Middle value dividing data into two equal parts.
  • Quartiles: Values dividing data into four equal parts.
  • Mode: Most frequently occurring value in data.

ECONOMICS — ALL CHAPTERS

1

Introduction

2

Theory of Consumer Behaviour

3

Production And Costs

4

The Theory Of The Firm Under Perfect Competition

5

Market Equilibrium

1

Introduction

2

Collection of Data

3

Organizing of Data

4

Presentation of Data

5

Measures of Central Tendency

6

Correlation

7

Index Numbers

8

Use of Statistical Tools