The Mathematics of Money

608

Learning Objectives

LO 1 Summarize statistical data using graphs and charts,

making an appropriate choice of the type of chart

or graph to use and generating it with Excel.

LO 2 Calculate the mean and median of a set of data,

and recognize which measure of average is the

more appropriate choice.

LO 3 Interpret indexes and use them appropriately in

making comparisons.

LO 4 Calculate and interpret standard deviations

appropriately.

Chapter Outline

16.1 Charts and Graphs

16.2 Measures of Average

16.3 Measures of Variation

Business

Statistics

16.1 Charts and Graphs

Statistics can be defined as the science (and sometimes the art) of turning raw data into

useful information. In business, many decisions need to be based on facts about the econ-

omy, competitive environment, and a host of other factors about which we need to obtain

and interpret data. If we are considering launching a new product, for example, we need to

collect data about competing products’ features and prices, and consumers’ need for and

expectations of such a product, so that we can make appropriate projections and decisions

about how to design and sell this product.

To be able to make effective use of this data, though, we need to process it. If we collect

data by surveying potential customers, for example, we won’t be able to use that data

effectively if we leave it in the form of a large pile of completed surveys stacked in a box.

“There are three kinds of lies: lies, damned

lies, and statistics.”

—Benjamin Disraeli (often attributed to Mark Twain)

608

CHAPTER

16