Measures of Central Tendency

THE ARITHMETIC MEAN

Definition 1: The arithmetic mean, or simply the mean, of a sample of n values

x1 , x2 , . . . , xn is defined by

x
x1  x2   xn

x
n n

Example 1: The following are the ages of a sample of 10 persons employed by a large
company in the last year: 48, 58, 33, 42, 57, 31, 52, 25, 46, and 60. Find the mean age.

Answer: 45.2.

THE WEIGHTED MEAN

Definition 2: The weighted mean, xw , of a sample of n values x1 , x2 , . . . , xn , whose

relative importance is expressed by the weights w1 , w2 , . . . , wn , is given by

w1 x1  w2 x2    wn xn  wx
xw  
w1  w2    wn w
Example 2: A portfolio of three public utility stocks was purchased at the following
prices: 400 shares at $38, 1000 shares at $28, and 600 shares at $42. Find the mean
purchase price per share.
Answer: $34.20.

Example 3: Bent Distribution Company, a subsidiary of a major appliance manufacturer,

is forecasting sales for next year. The Cornwall branch, with current yearly sales of $79.3
million, is expected to achieve a sales growth of 8.20%; the Middlesex branch, with
current yearly sales of $57.5 million, is expected to grow by 7.15%; and the Surrey
branch, with current yearly sales of $193.8 million, is expected to increase sales by
7.25%. What is the mean rate of sales growth forecasted for next year?

Answer: 7.46%.
2

THE GRAND MEAN

Definition 3: The grand mean, x , of k samples having the means x1 , x2 , . . . , xk , and

consisting of n1 , n2 , . . . , nk values is given by

n1 x1  n2 x2    nk xk  nx
x 
n1  n2    nk n
Example 4: In three separate weeks, a discount store chain sold 475, 310, and 420
microwave ovens at mean prices of $490, $520, and $495. Find the mean price of all the
ovens sold.

Answer: $499.46.

THE ARITHMETIC MEAN FOR GROUPED DATA

Definition 4: If a sample consists of the k values x1 , x2 , . . . , xk , which occur with the

frequencies f1 , f 2 , . . . , f k , then the mean is given by

f1 x1  f 2 x2    f k xk  fx
x 
f1  f 2    f k f
For a grouped frequency distribution, xi is taken as the class mark for class i, and f i the
corresponding class frequency.

Example 5: The frequency distribution below shows the hourly wages earned by 25
workers in a particular industry.

Hourly Wage ($) Number of Workers

0 9 2
10  19 3
20  29 4
30  39 6
40  49 5
50  59 3
60  69 2

Find the mean hourly wage.

Answer: $34.90.
 3

THE MEDIAN

Definition 5: The median of a set of n values x1 , x2 , . . . , xn is the middle value (if n is

odd) or the mean of the two middle values (if n is even) when the values are arranged in
an increasing (or decreasing) order of magnitude.

The sample median is denoted by ~ x . In general, the median of a set of n values, where n
is odd, is the [(n + 1)/2]th largest value; if n is even, then the median is the mean of the
(n/2)th and (n/2 + 1)th largest values.

Example 6: Eleven large companies reported that in 2016 they made cash donations to 9,
16, 11, 19, 11, 10, 13, 12, 6, 9, and 12 schools. Find the median number of donations.

Answer: 11.

Example 7: On 10 days, a bank had 18, 13, 15, 12, 8, 3, 7, 14, 16, and 3 foreign currency
transactions. Find the median.

Answer: 12.5.

THE MEDIAN FOR GROUPED DATA

The median of a grouped frequency distribution is that value for which half the total
frequency lies above it and half lies below it. By linear interpolation, it is given by

~  n 2  cf m1 
x  L1   c
 fm 

where L1 is the lower class boundary of the median class, n   f is the total
frequency, cf m1 is the sum of the frequencies of all classes preceding the median class,
f m is the frequency of the median class, and c is the class interval of the median class.
The median class is the class containing the median, that is, the class containing the
(n/2)th value.

Example 8: Find the median of the frequency distribution in Example 5.

Answer: $35.33.

THE MODE

Definition 6: The mode of a set of n values x1 , x2 , . . . , xn is the value which occurs with
the highest frequency greater than 1.
4

The sample mode is denoted by x̂.

Example 9: The 12 sessions of a seminar in personal financial planning were attended by

22, 16, 20, 20, 15, 16, 12, 14, 16, 14, 11, and 16 persons. Find the mode.

Answer: 16.

It should be noted that the mode may not exist, and even if it does exist, it may
not be unique.

Example 10: Find the mode of the set of numbers 19, 23, 29, 31, 25, and 22.

Answer: There is no mode.

Example 11: Find the mode of the set of numbers 70, 100, 140, 90, 90, 140, 90, 180,
160, 120, 110, 140, 140, 140, 90, 200, 90, and 110.

Answer: 90, 140.

THE MODE FOR GROUPED DATA

For a grouped frequency distribution, the mode is given by

 1 
xˆ  L1   c
 1   2 

where L1 is the lower class boundary of the modal class, 1 is the frequency of the
modal class minus the frequency of the class immediately preceding the modal class,  2
is the frequency of the modal class minus the frequency of the class immediately
following the modal class, and c is the class interval of the modal class. The modal class
is the class with the highest frequency.

Example 12: Find the mode of the frequency distribution in Example 5.

Answer: $36.17.