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Consider the following statement: More than \(65 \%\) of the residents of Los Angeles earn less than the average wage for that city. Could this statement be correct? If so, how? If not, why not?

Short Answer

Expert verified
Yes, the statement could be correct, because if there are outliers (people earning significantly more than the rest of the population), they can result in a higher average wage, even though the majority of people earn less than that amount.

Step by step solution

01

Derive the concept of Average

Average or mean is a measure of central tendency and is calculated as the sum of all data points divided by the number of data points. For example, if we are looking at wages, the average wage would be calculated by summing up the wages of all residents and dividing by the total number of residents.
02

Understand the Impact of Outliers

An important concept to understand is that the average can be greatly influenced by outliers. Consider a situation where 9 people earn $50 and 1 person earns $1,000. Although the majority earn $50, the average would be $145 due to the influence of the 1 person earning significantly more than the rest.
03

Apply these Concepts to the Problem

Given the fact that outliers can skew the average in one direction, it's entirely possible for a majority (in this case over 65%) of the residents to earn less than the average wage. This could occur if there are a few residents who earn a significantly higher wage than almost everyone else, pulling the average wage upwards.

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