The Advantage of Using Mean Absolute Deviation Rather Than Variance

question 119

Multiple Choice

The advantage of using mean absolute deviation rather than variance as a measure of dispersion is that mean absolute deviation ________.

• A) is less sensitive to extreme deviations
• B) requires fewer observations to be a valid measure
• C) is a relative measure rather than an absolute measure of risk
• D) considers only unfavorable (negative) deviations from the mean

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Definitions:

Unit Costs

The expenses a company faces to manufacture, warehouse, and market a single unit of a specific product or service.

Outliers

Data points that lie significantly outside the range of the rest of the data, often indicating a variance from the norm that could warrant further investigation.

Missing Data

Refers to the absence of data points or information in datasets, which can lead to challenges in analysis and decision-making.

Fixed Fee

A pricing strategy where a single fixed amount is charged for a service regardless of usage or time required.