Problem 112
Averageville is considering levying a flat tax on its citizens. To get an idea of the amount of revenue this tax would raise, the city council instructed the city staff to make a census of households to determine the “average” household income. The city accountant claims that they should use the median household income, rather then the mean. What do you think? Explain.
Solution
The city of Averageville should use the mean to determine the average household income if the population is large because it would give a valid result, but if they use the mean and the population of Averageville is small it could give false results, then the median should be used.