Arithmetic Mean
Definition of Arithmetic Mean:
It’s an average that measure for representing the entire data by one value. And what the
statisticians call the arithmetic mean.
It’s value is obtained by adding together all the observations and by dividing this total by the
number of observations.
Calculation of Arithmetic Mean:
Ungrouped Data:
Direct Method;
Σx
x=
N
Example: The monthly income of 10 employees working in a firm is as following.
4487,4493,4502,4446,4475,4492,4572,4516,4468.
Calculation: ∑x=4487+4493+4502+4446+4475+4492+4572+4516+4468+4489=44940
Σx 44940
x= = =44940
N 10
Shortcut Method;
Σd
x= A+
N
Here,
A= Assumed Mean,
∑d= (x-A),
N= Number of frequency
It should be noted that any value can be taken as arbitrary point and as would be the name as
obtained by the direct method.
Calculation of average income:
X D(x-A)
4487 +27
4493 +33
4502 +42
4446 -14
4475 +15
4492 +32
4572 +112
4516 +56
4468 +8
4489 +29
N=10 ∑d=+340
Σd 340
x= A+ = 4460+ =4494
N 10
Grouped Data:
Direct Method;
Σfx
x=
N
Here,
x= Midpoint of various classes
f= The frequency of each class
N= The total frequency
Example: The followings are the list of profits earned by 1400 employees.
Profits No. of companies
200-400 500
400-600 300
600-800 280
800-1000 120
1000-1200 100
1200-1400 80
1400-1600 20
Solution:
Direct Method;
Profit Mid point No. companies fx
200-400 300 500 150000
400-600 500 300 150000
600-800 700 280 196000
800-1000 900 120 108000
1000-1200 1100 100 110000
1200-1400 1300 80 104000
1400-1600 1500 20 30000
N=1400 ∑fx=848000
Σfx 848000
x=
N
= 1400
= 605.71
Shortcut Method;
Σfd
x= A+ ×ⅈ
N
Here,
A= Assumed Mean,
d= (x-A)
N= Number of frequency
i= Difference between class
Solution:
Profit Mid point f (x-900)/200=d fd
200-400 300 500 -3 -1500
400-600 500 300 -2 -600
600-800 700 280 -1 -280
800-1000 900 120 0 0
1000-1200 1100 100 1 100
1200-1400 1300 80 2 160
1400-1600 1500 20 3 60
N=1400 ∑fd=2060
Σfd
x= A+ ×ⅈ
N
2060
= 900+ ×200
1400
=605.71
Mathematical Properties of Arithmetic Mean:
The important mathematical properties of arithmetic means are,
1. The algebraic sum of the deviation of all the observation from arithmetic mean is always 0.
x ( x−x )
10 -20
20 -10
30 0
40 10
50 20
Σx=150 ∑ ( x−x )=0
∑x 150
x=
N
= 5
=30
2. The sum of the required deviations of all the observations from arithmetic mean is
minimum that is less than the required deviations of all the observations from any other
value than the mean.
x ( x−x ) ( x−x )2
2 -2 4
3 -1 1
4 0 0
5 1 1
6 2 4
Σx=20 ∑ ( x−x )=0 2
∑ ( x−x ) =10
∑x 20
x=
N
= 5
=4
3. If we have the arithmetic mean and number of observations pf two or more than two
related groups, we can compute combine average of these groups.
N 1 x 1+ N 2 x 2
x 12=
N 1+ N 2
x 12=Combined mean of thetwo group .
x 1=¿Arithmetic group of the first group.
x 2=¿Arithmetic mean of the second group.
N 1=¿ Number of the observations in the first group.
N 2=¿ Number of the observations in the second group.
Merits and Limitations of Mean:
Merits:
Ease of computation: It is easy to calculate, making is wildly applicable.
Reflect Central tendency: Provides a representative value that summarize a set of
data points.
Sensitive to Changes: Responds to changes in data value, making it useful defiling
outline.
Limitations:
Sensitive to outliners: Extreme values can significantly impact the mean.
Not appropriate for skewed distribution: In skewed distributions the mean may not
accurately represent the central location.
Dependent on scale: The mean is influenced by the scale of measurement.
Not Robust: The mean may not robust in the presence of data with substantial
variability.
Weighted Arithmetic Mean:
The term weight stands for the relative importance of the different observations. The weighted
arithmetic mean is calculated by multiplying each value by its respective weight, summing this
products and dividing by the sum of the weights.
Σwx
x w=
Σw
Here,
x=the variable
w= weights attained to the variable x
Wage per day (x) No. of workers (w) wx
100 20 2000
75 15 1125
35 5 175
∑w=40 ∑wx=3300
Example:
Σwx 3300
x w= = =82.50
Σw 40
