A recent article in The Washington Post Weekly Edition indicated that about 80% of the estimated $200 billion of federal housing subsidies consists of tax breaks (mainly deductions for mortgage interest payments and preferential treatment for profits on home sales). Federal housing benefits average $8,268 for those with incomes between $50,000 and $200,000 and $365 for those with income of $40,000 to $50,000. Suppose the standard deviations of the housing benefits in these two categories were equal to $2,750 and $120, respectively.
a. Examine the two standard deviations. What do these indicate about the range of benefits enjoyed by the two groups?
b. Repeat part a using the coefficient of variation as the measure of relative variation.