This chapter talks about means. The median is a closely related concept. The median is the numerical value separating the higher half of your data from the lower half. You can find the median by arranging all of the observations from lowest value to highest value and picking the middle value (assuming you have an odd number of observations). While the mean and median are closely related, the difference between the mean and the median is sometimes of interest.
a. Suppose country A has five families. Their incomes are $10,000, $20,000, $30,000, $40,000, and $50,000. What is the median family income in A? What is the mean income?
b. Country B also has five families. Their incomes are $10,000, $20,000, $30,000, $40,000, and $150,000. What is the median family income in B? What is the mean income?
c. In which country is income inequality greater, A or B?
d. Suppose you thought income inequality in the US had increased over time. Based on your answers to this question, would you expect that the ratio of the mean income in the US to the median income has risen or fallen? Explain.