Chapter 12.3, Problem 28PPE

To determine

To find: The average earning of a sales person in the given company.

Explanation of Solution

Given information:

In a certain company last year, $6$ sales person earned $\$33,000$ , $3$ earned $\$46,000$ , $2$ earned $\$42,000$ and $1$ earned $\$150,000$ .

Calculation:

In a certain company last year, $6$ sales person earned $\$33,000$ , $3$ earned $\$46,000$ , $2$ earned $\$42,000$ and $1$ earned $\$150,000$ .

  $\begin{array}{l}\text{Mean}=\frac{\left(33000\times 6\right)+\left(46000\times 3\right)+\left(42000\times 2\right)+\left(150000\times 1\right)}{12}=\$47000\\ \text{Median}=\$33000\\ \text{Mode}=\$33000\end{array}$

Although mean earning of a sales person in the company is $\$47500$ as updated by friend, there is an outlier data value of $150000$ . Therefore mean is not the best measure of central tendency. The median is better suited for the measurement of central tendency and the median is $\$33,000$ (way less than advertised). Hence, would not apply for the in the given company.