Consider two cities A and B. In city A, the average price of single family house
ID: 2810164 • Letter: C
Question
Consider two cities A and B. In city A, the average price of single family houses is 200,000 dollars with a standard deviation of 25, 000 dollars. In city B, the average price of single family houses is 500,000 dollars with a standard deviation of 50, 000 dollars.
Which statement is correct?
Select one:
a. City A has a coefficient of variation of 10%
b. City B has a coefficient of variation of 50,000 dollars
c. City A has a lower standard deviation and hence its price distribution is less variable
d. City B has a less variable price distribution
Explanation / Answer
Coefficient of Variation = Standard Deviation/Average Price
City A = 25000/200,000 = 0.125
City B = 50000/500000 = 0.1
Lower CV implies less variable price distribution
Hence, d is correct
City B has a less variable price distribution