Roughly Speaking, the Standard Deviation Indicates How Far, on Average $$2,3,4,4,5,5,6,6,100$$

question 22

Essay

Roughly speaking, the standard deviation indicates how far, on average, the observations are from the mean. Do you think that for the data set below the standard deviation will give a good indication of the typical deviation from the mean? $$2,3,4,4,5,5,6,6,100$$ What drawback of the standard deviation is illustrated by this example?

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Definitions:

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Profit

The difference between the amounts received from customers for goods or services provided and the amounts paid for the inputs used to provide the goods or services.

Direct Materials Cost

The expense associated with raw materials directly incorporated into a finished product.

Break-even Point

Break-even Point is the financial analysis term that indicates when total costs and total revenues are exactly equal, resulting in neither profit nor loss.