2. Skewness Scenario: Suppose you want to buy a house in Monterey Bay area, wher

Question

2. Skewness Scenario: Suppose you want to buy a house in Monterey Bay area, where most house prices range from $300,000 to $3,000,000 approximate y. Suppose your budget is limited, so you want to target for a mid-price house. Here is a sample of size n 20. The sample mean is 8923,600 and the sample median is m 8777, 200 Objective: Between the population mean and the population median, we want to choose an appropriate parameter to be estimated given a question of interest. In addition, we want to have a good sense about skewness from the boxplot and the histogram. House Prices in Monterey Bay House Prices in Monterey Bay 0 500 1500 2500 0 500 1500 2500 House Price ($1,000) House Price ($1,000) a. Would you use the sample mean or the sample median for the reference of a mid-price house? Justify. b. Multiple choice. It seems that the population distribution is i. symmetric ii. Right-skewed iii. Left-skewed

Explanation / Answer

a) Median will be a better choice because it does not get influenced by the very low or high values unlike mean

b) The population distribution is right skewed because the higher values have a very low frequency

c) m=777,200 is a median which for a right skewed distribution will be lower than the mean

d) for population 1 correct choice is population c

for pop 2 correct choice is pop B

for pop 3 correct choice is pop A

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