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You handle the payroll at a small company whose president boasts that the average salary at his company is $54,000.

What is the statistical reason for this distorted view of the company's average pay? Then, using the salaries listed below for everyone that works at this company determine the mean, median, mode, and range of salaries for this small company.

Salaries: $200,000 (president's salary); $100,000 (vice­president's salary)
Other eight employees earn $30,000 each.
What will be an ideal response?
Mean = $54,000 (add up the scores and divide by the total number of scores) Median = $30,000 (the middle score)
Mode = $30,000 (the most frequently occurring score)
Range = 170, 000 (difference between the highest and lowest scores in a group of scores)

Marked as best answer by Frances

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ANSWER: Answer will include that although $54,000 is the correct mean for all salaries at the company, it is probably not the best measure of central tendency to use to convey a clear picture of the salaries because the mean is sensitive to extremely high or low scores in a distribution. Thus, the larger salaries of the president and vice-president created the distortion. The median or the mode would portray a truer picture of the pay scale for most of the people at the company.

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