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NotesBusiness ManagementTopic 6.7Measures of central tendency
Back to Business Management Topics
6.7.11 min read

Measures of central tendency

IB Business Management โ€ข Unit 6

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Contents

  • Mean, median and mode
  • When to use each measure
  • Worked examples

๐Ÿ“Š Mean, median and mode

Big Idea: Measures of central tendency find the 'middle' or 'typical' value in a data set. The three main measures are mean, median and mode. ๐ŸŽฏ

Mean (average)

  • Add up all values รท number of values
  • Uses every data point โ€” most common measure
  • Can be distorted by extreme values (outliers)

Median (middle value)

  • Put values in order, find the middle one
  • Not affected by outliers
  • Good for skewed data (e.g. salary data)

Mode (most common value)

  • The value that appears most often
  • Can have no mode, one mode, or multiple modes
  • Useful for categorical data (e.g. most popular product)

๐Ÿค” When to use each

  • Mean โ€” best for evenly spread data with no extreme outliers
  • Median โ€” best when outliers could distort the average (e.g. wages, house prices)
  • Mode โ€” best for finding the most popular item (e.g. best-selling shoe size)
Mean = add and divide. Median = middle of ordered list. Mode = most frequent. Easy! ๐Ÿงฎ

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๐Ÿ“ Worked examples

Data set: 5, 8, 8, 10, 12, 15, 50

  • Mean = (5+8+8+10+12+15+50) รท 7 = 108 รท 7 = 15.4
  • Median = 10 (the 4th value when ordered โ€” middle of 7 values)
  • Mode = 8 (appears twice, more than any other value)
  • Note: the mean (15.4) is pulled up by the outlier (50). The median (10) is more representative here.
Exam tip: If a question gives you data with an obvious outlier, comment on how the mean is distorted and suggest the median as a better measure.

Related Business Management Topics

Continue learning with these related topics from the same unit:

6.1.1What is a SWOT analysis?
6.1.2Using SWOT for strategic decisions
6.1.3Writing SWOT-based recommendations
6.2.1The Ansoff matrix
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IB Exam Questions on Measures of central tendency

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How Measures of central tendency Appears in IB Exams

Examiners use specific command terms when asking about this topic. Here's what to expect:

Define

Give the precise meaning of key terms related to Measures of central tendency.

AO1
Describe

Give a detailed account of processes or features in Measures of central tendency.

AO2
Explain

Give reasons WHY โ€” cause and effect within Measures of central tendency.

AO3
Evaluate

Weigh strengths AND limitations of approaches in Measures of central tendency.

AO3
Discuss

Present arguments FOR and AGAINST with a balanced conclusion.

AO3

See the full IB Command Terms guide โ†’

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6.6.2Constructing and calculating decision trees
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Measures of dispersion6.7.2

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