Measures of Central Tendency Your Math’s Buddy

Aman Khedia

Measures of Central Tendency

Comparative Chart of Common Theory Point

Sr Arithmetic Geometric Harmonic

Particulars Median Mode
No. Mean (AM) Mean (GM) Mean (HM)

Whether Based
1 on All Items of No No
Series

Combined
2 Average No No
Formula Exist?

Whether It
Requires
Arrangement
3 of Data in No No No No
Ascending/
Descending
Order?
Whether
Affected by
4
Sampling
Fluctuation
Whether
Affected by
5
Extreme
Values
Average For
Rate / Ratios Rates / Ratios
Open-
Qualitative of Increase/ Involving
6 Suitable For Other Cases Ended
Distribution
Data Decrease, Speed, Time,
Average Distance, Price
Percentages & Quantity.

Can It Be
7 Determined No Yes Yes No No
Graphically?

Independent of
8 No No No No No
Origin

Independent of
9 No No No No No
Scale

Statistics Theory
Measures of Central Tendency Your Math’s Buddy
Aman Khedia

Mathematical
10
Property

Keep in Mind Points

[Link] General Points of MOCT

✓ MOCT are Known as average of

✓ The Word “Mean” or “Average” only refers to

✓ Word Average used in “simple or “weighted average” general refers to

✓ The Average discovers

0 ✓ Average has relevance for

✓ Frequencies are known as

✓ Each value is considered Only Once also known as

✓ Each value is Multiple Times

✓ Correction factor is applied in

Mean

✓ Usually

✓ Most commonly used measure

1.
✓ Pooled Mean is also called

✓ A.M is used when we have to Calculate

Median

✓ Median is the best measure in case of

✓ In case of an even number of observations median is the simple average of these two

middle values
2.
✓ The number of observations smaller than Median is the same as the number larger than it.

✓ Mode & Median cannot be treated algebraically

✓ Three Quartiles are Used in

Statistics Theory
Measures of Central Tendency Your Math’s Buddy
Aman Khedia

Mode

✓ Mode is Not uniquely defined

✓ When all values occur with equal frequency, there is no Mode

3. ✓ Mode cannot be treated algebraically

✓ At Mode concentration of observation is the

✓ For calculation of Mode, we have to construct a Grouped frequency distribution

GM & HM

✓ G.M & H.M has a

Ambiguity
What if Questions Given Following Options? ([Link] 41. AQB of Module)
___________ has limited use?
(a)AM (b) GM (c) HM (d) None
4. ✓ H.M & G.M cannot be calculated if any observation is zero.

✓ H.M is a good substitute to a

✓ H.M is the reciprocal of the A.M of reciprocal of observations.

✓ Calculation of G.M is More Difficult than

Practical Cum Theory Questions

Case-1: One Hundred participants expressed their opinion on recommending a new product to their
friends using the attributes: most unlikely, not sure, likely, most likely. The appropriate measure of central
tendency that can be used here is

Case-2: Along a road there are 5 buildings of apartments, marked as 1,2,3,4,5. Number of people residing
in each building is available. A bus stop is to be setup near one of the buildings so that the total distance
walked by the residents to the bus stop from their buildings must be kept minimum. One must consider
involving to find the position of the bus stop

Case-3: For ordering shoes of various sizes & particular size of a cloth in a showroom for resale, which
measure will be more appropriate

Statistics Theory
Measures of Dispersion Your Math’s Buddy
Aman Khedia

Measures of Dispersion

Comparative Chart of Common Theory Point of MOD

Sr No. Range Quartile Deviation Mean Deviation Standard deviation

Whether
based on
3 No No
All items
of Series?
Combined
4 Deviation No No No
Formula Exist?

Whether
affected by
5
Extreme
values

Whether
suitable for
6
Open- end
No Yes No No
distribution
Actual + signs of
deviations are Actual + signs of
Signs of
7 - - ignored and all deviations are taken
deviations
deviations are into consideration
taken as positive

Is it Affected
8 by Change of No No No No
origin

Is it Affected
9 by Change of
Scale

Mathematical
10
Property

Statistics Theory
 Measures of Dispersion Your Math’s Buddy
Aman Khedia

Keep in Mind Points

[Link] Basics of MOD
✓ MOD are Known as Average of
✓ Dispersion measures the Scatternets of a set of observations
✓ MOD Decide the Amount of Variation, & the Degree of Variation

Range
✓ As the sample size increases, range also tends to

1. ✓ range has the greatest use in

✓ Dependence of range on EXTREME ITEMS can be avoided by adopting

Mean Deviation

2. ✓ Mean deviation of dispersion is based on the Absolute Deviations only

Quartile Deviation
✓ Quartile deviation is appropriate measure of dispersion in

3. ✓ Quartile Deviation =

✓ is called Semi-Interquartile Range

Standard Deviation

✓ When all the values are equal then variance & standard deviation would be

E.g., If the Profits of a company remain the same for the last ten months, then the

standard deviation of profits for these ten months would be Zero

✓ factor helps to know the value of standard deviation.

4. ✓ For values lie close to the mean, the standard deviations are

✓ Coefficient of variation is given by

✓ Standard deviation is measure of dispersion is considered for finding a pooled measure

of dispersion after combining several groups

✓ SD is less than Mean Deviation

Note:
MOCT MOD
Identical Identical
Two Distribution May Have Identical Different
Different Identical

Statistics Theory
Correlation Analysis Your Math’s Buddy
Aman Khedia

Correlation Analysis
Comparative Chart of Common Theory Point of all Methods

Karl Pearson’s Spearman’s

Concurrent
Particulars Co-variance coefficient of Rank correlation
Deviation Method
correlation coefficient
Who
Karl Pearson Karl Pearson Spearman -
originated

Based on Actual data Actual data Ranks Direction of change

It is suitable for
It gives direction as qualitative data
It is Direct
well as degree of which can only It is suitable for large
Merit measure of
relationship between be ranked in no. of items
correlation
the variables. some order for
abnormal data
Is
independent
Yes Yes Yes Yes
of choice of
origin?
Is
independent
No Yes Yes Yes
of choice of
scale?
Limits
within -∞ to +∞ -1 to +1 -1 to +1 -1 to +1
which lies

∑(𝑥−𝑥)(𝑦−𝑦)
Formula COV= 𝑁

Other Important Key Points

Index Number Your Math’s Buddy
Aman Khedia

Index Number
Basics of Index Number

✓ Index Number is a Special type of Average

✓ Index time Series is a list of Index Number of two or more Period of Time.

✓ Index number is a series of Numeric Values which show Relative Position.

✓ Very important role in construction of Index Number

✓ Index Number shows Change rather than absolute change.

✓ Index numbers are often constructed for

✓ 𝑃01 is index for time

✓ We Calculate Price index number

✓ Purpose determines the type of index number to be used.

✓ Index Numbers are helpful in
Framing Economics Policies Point to rememberz
Revealing trends

Forecasting

Deflating

Cost of Living Index

✓ Theoretically the Best average is But Practically is Used.

✓ Which Method Permits the Introduction of New item and Deletion of old items

✓ Method for Comparison of change in price level every year

✓ Which Method is used for linking two or more index number series?

✓ Which technique to eliminate effect of changing price levels

✓ Purchasing power of Money is

✓ For Consumer price index, Price quotations are collected from

✓ Consumer price index is known as

✓ S When the Price for Quantities Then Index Number due to

consumed are Changing in
the Same Ratio
Laspeyre’s & Paasche’s will be

✓ Index number based on Index number based on

Arithmetic Mean Geometric Mean

Statistics Theory
Index Number Your Math’s Buddy
Aman Khedia

Extract of important Index Numbers which satisfy the test of Adequacy

Time Factor
Particulars Unit Test Circular
Reversal Reversal

Laspeyere's ✓ × × ×

Paasche's ✓ × × ×

Fisher's ✓ ✓ ✓ ×

Marshall Edgeworth ✓ ✓ × ×

Simple GM of Price Relatives × ✓ × ✓

1. Time reversal test is satisfied when P01 × P10 = 1.

∑𝑝 𝑞
2. Factor reversal test is satisfied when P01 × Q01 = ∑ 𝑝1𝑞1.
0 0

3. Circular test is satisfied when P01 × P12 × P20 = 1.

Statistics Theory