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Ast5e PPT ch02

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26 views80 pages

Ast5e PPT ch02

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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 2

Exploring Data
with Graphs and
Numerical
Summaries

2-1 Copyright © 2021, 2017, and 2017, Pearson Education, Inc.


Section
2.1
Different Types of
Data

2-2 Copyright © 2021, 2017, and 2017, Pearson Education, Inc.


Variable

A variable is any characteristic observed in a study.

Examples: high temperature, low temperature, cloud cover,


whether it rained, and number of centimeters of precipitation

A variable can be classified as either


▪ Categorical (in Categories), or
▪ Quantitative (Numerical)

2-3 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Categorical Variable

A variable can be classified as categorical if each


observation belongs to one of a set of distinct categories.

Examples:
▪ Gender (Male or Female)
▪ Religious Affiliation (Catholic, Jewish, …)
▪ Type of Residence (Apartment, Condo, …)
▪ Belief in Life After Death (Yes or No)

2-4 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Quantitative Variable

A variable is called quantitative if observations on it take


numerical values that represent different magnitudes of the
variable.

Examples:
▪ Age
▪ Number of Siblings
▪ Annual Income

2-5 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Main Features of Quantitative and Categorical
Variables

For Quantitative variables: key features are the center and


variability (spread) of the data.

Example: What’s a typical annual amount of precipitation? Is


there much variation from year to year?

For Categorical variables: a key feature is the relative


number of observations in the various categories.

Example: What percentage of days were sunny in a given


year?

2-6 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Discrete Quantitative Variable

A quantitative variable is discrete if its possible values form


a set of separate numbers, such as 0,1,2,3,….

Discrete variables have a finite number of possible values.

Examples:
▪ Number of pets in a household
▪ Number of children in a family
▪ Number of foreign languages spoken by an individual

2-7 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Continuous Quantitative Variable

A quantitative variable is continuous if its possible values


form an interval.

Continuous variables have an infinite number of possible


values.

Examples:
▪ Height/Weight
▪ Age
▪ Amount of time to complete an assignment

2-8 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Distribution of a Variable

The distribution of a variable describes how the


observations fall (are distributed) across the range of
possible values.

Graphs and frequency tables are used to look for key


features of a distribution.

2-9 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Frequency Table

A frequency table is a listing of possible values for a


variable, together with the number of observations and/or
relative frequencies for each value.

Table 2.1 Frequency of Shark Attacks in Various Regions for 2004–2013

2-10 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Proportion & Percentage (Relative
Frequencies)
The proportion of observations falling in a certain category
is the number of observations in that category divided by the
total number of observations.

frequency of that class


proportion =
sum of all frequencies

The percentage is the proportion multiplied by 100.

Proportions and percentages are also called relative


frequencies.

2-11 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Frequency, Proportion, & Percentage
Example

There were 203 reported shark attacks in Florida between


2004 and 2013. Table 2.1 classifies 689 shark attacks
reported from 2004 through 2013, so, for Florida,

▪ 203 is the frequency.


▪ 203/689 = 0.295 is the proportion and relative
frequency.
▪ 29.5 is the percentage 0.295 *100= 29.5%.

2-12 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Discrete Quantitative Variable

To show the distribution for a discrete quantitative


variable, we would similarly list the distinct values and the
frequency of each one occurring.

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Continuous Quantitative Variable

For a continuous quantitative variable (or when the


number of possible outcomes is very large for a discrete
variable), we divide the numeric scale on which the variable
is measured into as set of nonoverlapping intervals and
count the number of observations that fall in each interval.
The frequency table then shows these intervals together with
the corresponding count.

2-14 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Section
2.2

Graphical
Summaries of
Data

2-15 Copyright © 2021, 2017, and 2017, Pearson Education, Inc.


Graphs for Categorical Variables

The two primary graphical displays for summarizing a


categorical variable are the pie chart and the bar graph.

Pie Chart: A circle having a “slice of pie” for each category

Bar Graph: A graph that displays a vertical bar for each


category

2-16 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Pie Charts

Pie Charts:
▪ Used for summarizing a categorical variable.

▪ Drawn as a circle where each category is represented


as a “slice of the pie”.

▪ The size of each pie slice is proportional to the


percentage of observations falling in that category.

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Example: Shark Attacks in the United States

Table 2.2 Unprovoked Shark Attacks in the U.S., 2004 - 2013

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Example: Shark Attacks in the United States

Figure 2.1 Pie Chart of Shark Attacks Across U.S. States. The label for each
slice of the pie gives the category and the percentage of attacks in a state. The slice that
represents the percentage of attacks reported in Hawaii is 13% of the total area of the pie.
Question Why is it beneficial to label the pie wedges with the percent?

2-19 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Bar Graphs

Bar graphs are used for summarizing a categorical variable.

▪ Bar graphs display a vertical bar for each category.


▪ The height of each bar represents either counts
(“frequencies”) or percentages (“relative frequencies”) for
that category.
▪ It is usually easier to compare categories with a bar
graph rather than with a pie chart.
▪ Bar graphs are called Pareto charts when the
categories are ordered by their frequency, from the
tallest bar to the shortest bar.

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Example: Shark Attacks in the United States

Figure 2.2 Bar Graph of Shark Attacks Across U.S. States. Except for the Other
category, which is shown last, the bars are ordered from largest to smallest based on
the frequency of shark attacks. Question What is the advantage of ordering the bars
this way rather than alphabetically?

2-21 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Graphs for Quantitative Variables

Dot Plot: shows a dot for each observation placed above its
value on a number line.

Stem-and-Leaf Plot: portrays the individual observations.

Histogram: uses bars to portray the data.

2-22 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Dot Plots

Dot plots are used for summarizing a quantitative variable.

To construct a dot plot


1. Draw a horizontal line.
2. Label it with the name of the variable.
3. Mark regular values of the variable on it.
4. For each observation, place a dot above its value on
the number line.

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Stem-and-Leaf Plots

Each observation is represented by a stem and a leaf.

To construct a stem-and-leaf plot


1. Sort the data in order from smallest to largest.
2. Place the stems in a column, starting with the
smallest.
3. Place a vertical line to their right.
4. On the right side of the vertical line, indicate each leaf
(final digit) that has a particular stem.
5. List the leaves in increasing order.

2-24 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Steps for Constructing a Histogram

A histogram provides a versatile way to picture the


distribution of a large data set.

1. Divide the range of the data into intervals of equal width.


2. Count the number of observations in each interval,
creating a frequency table.
3. On the horizontal axis, label the values or the endpoints
of the intervals.
4. Draw a bar over each value or interval with height equal
to its frequency (or percentage), values of which are
marked on the vertical axis.
5. Label and title appropriately.

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Example: Sodium in Cereals

Table 2.4 Frequency Table for Sodium in 20 Breakfast Cereals. The table
summarizes the sodium values using nine intervals and lists the number of
observations in each, as well as the proportions and percentages.

2-26 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Histogram for Sodium in Cereals

Figure 2.6 Histogram of Breakfast Cereal Sodium Values. The rectangular bar over
an interval has height equal to the number of observations in the interval.

2-27 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Choosing a Graph Type

How do we decide which to use? We suggest always


plotting the histogram to get an idea about the distribution.
Additional considerations for graphing include:
Histogram
▪ More useful for large data sets
▪ Most compact display
▪ More flexibility in defining intervals
Dot-plot and stem-and-leaf plot
▪ More useful for small data sets
▪ Data values are retained

2-28 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


The Shape of a Distribution

A histogram (or a stem-and-leaf or dot plot) visualizes the


distribution of a quantitative variable. Here are important questions
to ask:
• Does the distribution have a single mound or peak?
▪ If there is a single mound or peak, then it is unimodal.
▪ If there are two distinct mounds, then it is bimodal.
• What is the shape of the distribution?
▪ Symmetric – each side of the distribution is a mirror image
of the side about a central value
▪ Skewed - one side of the distribution stretches out longer
than the other side
• Do the data cluster together, or is there a gap?
If one or more observations deviate from the rest, then these
are “outliers”. Discussion to follow.

2-29 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Shape

The value that occurs the most often is called the mode.

A distribution is unimodal A distribution is bimodal


if it has a single mound or if it has two distinct
peak. mounds.

2-30 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Shape

Symmetric Distributions: if both left and


right sides of the histogram are mirror images of
each other.

A distribution is skewed A distribution is skewed to


to the left if the left tail is the right if the right tail is
longer than the right tail. longer than the left tail.

2-31 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Examples of Skewness

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Time Plots

A data set collected over time is called a time series.


Time plots are used to display time series data graphically.

▪ Plots each observation on the vertical scale against the


time it was measured on the horizontal scale.
▪ Common patterns in the data over time, known as
trends, should be noted.
▪ To see a trend more clearly, it is beneficial to connect
the data points in their time sequence.

2-33 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Time Plot Example

The figure shows a time plot of the average of the daily


average temperatures for that year in Central Park, New York
City, from 1869 to 2018.

2-34 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Section
2.3
Measuring the
Center of
Quantitative Data

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Mean

The mean is the sum of the observations divided by the


number of observations.

x =
x
n

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Example: Center of the Cereal Sodium Data

We find the mean by adding all the observations and then


dividing this sum by the number of observations, which is 20:
0, 340, 70, 140, 200, 180, 210, 150, 100, 130,
140, 180, 190, 160, 290, 50, 220, 180, 200, 210

Mean = (0 + 340 + 70 + . . . +210)/20 = 3340/20 =167

2-37 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Median

The median is the middle value of the observations when they are
ordered from the smallest to the largest (or from the largest to
smallest).

How to Determine the Median:

Put the n observations in order of their size.


If the number of observations, n, is:
▪ odd, then the median is the middle observation.
▪ even, then the median is the average of the two middle
observations.

2-38 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Outlier

An outlier is an observation that falls well above or well


below the overall bulk of the data.

2-39 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Example: CO2 Pollution

CO2 pollution levels in 9 largest nations measured in metric


tons per person:

The CO2 values have n = 9 observations. The ordered


values are: 0.3, 0.4, 0.8, 1.4, 1.8, 2.1, 5.9, 11.6, 16.9.

2-40 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Example: CO2 Pollution

Since n is odd, the median is the middle value, 1.8.

The relatively high value of 16.9 falls well above the rest of the
data. It is an outlier.

The size of the outlier affects the calculation of the mean but not
the median.

2-41 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Comparing the Mean and Median

The shape of a distribution influences whether the mean is


larger or smaller than the median.

▪ Perfectly symmetric, the mean equals the median.

▪ Skewed to the left, the mean is smaller than the


median.

▪ Skewed to the right, the mean is larger than the


median.

2-42 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Comparing the Mean and Median

In a skewed distribution, the mean is farther out in the long tail


than is the median.

▪ For skewed distributions the median is preferred because


it better represents what is typical.

Figure 2.9 Relationship Between the Mean and Median. Question: For skewed
distributions, what causes the mean and median to differ?

2-43 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Resistant Measures

A numerical summary measure is resistant if extreme


observations (outliers) have little, if any, influence on its
value.

▪ The Median is resistant to outliers.


▪ The Mean is not resistant to outliers.

2-44 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


The Mode

Mode

▪ Value that occurs most often.

▪ Highest bar in the histogram.

▪ The mode is most often used with categorical data.

2-45 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Section
2.4
Measuring the
Variability of
Quantitative Data

2-46 Copyright © 2021, 2017, and 2017, Pearson Education, Inc.


Range

One way to measure the variability of a distribution is to


calculate the range.
The range is the difference between the largest and
smallest observations in the data set:
Range = maximum value – minimum value

The range is simple to compute and easy to understand,


but it uses only the extreme values and ignores the other
values. Therefore, it’s affected severely by outliers.

2-47 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Standard Deviation

The deviation of an observation x from the mean 𝑥ҧ is


(𝑥 − 𝑥),
ҧ the difference between the observation and the
sample mean.

▪ Each observation has a deviation from the mean.

▪ A deviation is positive if the value falls above the mean


and negative if the value falls below the mean.

▪ The sum of the deviations for all the values in a data


set is always zero.

2-48 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Standard Deviation

The deviation of an observation x from the mean 𝑥ҧ is


(𝑥 − 𝑥),
ҧ the difference between the observation and the
sample mean.

▪ Summary measures of variability from the mean use


either the squared deviations or their absolute values.

▪ The average of the squared deviations is called the


variance.

▪ The symbol σ(𝑥 − 𝑥)ҧ 2 is called a sum of squares.

2-49 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Standard Deviation Example

For the cereal sodium values, the mean is 𝑥ҧ = 167. The


observation of 210 for Honeycomb has a deviation of
210 - 167 = 43. The observation of 50 for Honey Smacks
has a deviation of 50 – 167 = -117. Figure 2.11 shows
these deviations.

Figure 2.11 Dot Plot for Cereal Sodium Data, Showing Deviations for Two
Observations. Question: When is a deviation positive and when is it negative?

2-50 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


The Standard Deviation s of n
Observations

Gives a measure of variation by summarizing the deviations


of each observation from the mean and calculating an
adjusted average of these deviations.

( x − x ) 2
s=
n −1
The larger the standard deviation, s, the greater the
variability of the data.

2-51 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Standard Deviation Example

Women’s and Men’s Ideal Number of Children


Men: 0, 0, 0, 2, 4, 4, 4 Women: 0, 2, 2, 2, 2, 2, 4

Both men and women have a mean of 2 and a range of 4.

The standard deviation for men is


σ(𝑥−𝑥)ҧ 2 24
𝑠= = = 2.0.
𝑛−1 6

The standard deviation for women is 1.2.

2-52 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Properties of the Standard Deviation

The most basic property of the standard deviation is this:

The larger the standard deviation s, the greater the variability of the
data.
▪ s measures the spread of the data.
▪ s = 0 only when all observations have the same value, otherwise
s > 0. As the spread of the data increases, s gets larger.
▪ s has the same units of measurement as the original
observations. The variance = s 2 has units that are squared.
▪ s is not resistant. Strong skewness or a few outliers can greatly
increase s.

2-53 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Magnitude of s: The Empirical Rule

If a distribution of data is bell-shaped, then approximately:

▪ 68% of the observations fall within 1 standard deviation of the


mean, that is between the values of 𝑥ҧ – s and 𝑥ҧ + 𝑠 (denoted
𝑥ҧ ± 𝑠).

▪ 95% of the observations fall within 2 standard deviations of


the mean (𝑥ҧ ± 2𝑠).

▪ All or nearly all observations fall within 3 standard deviations


of the mean (𝑥ҧ ± 3𝑠).

2-54 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Magnitude of s: The Empirical Rule

Figure 2.12 The Empirical Rule. For bell-shaped distributions, this tells us approximately
how much of the data fall within 1, 2, and 3 standard deviations of the mean. Question:
About what percentage would fall more than 2 standard deviations from the mean?

2-55 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Section
2.5
Using Measures
of Position to
Describe
Variability

2-56 Copyright © 2021, 2017, and 2017, Pearson Education, Inc.


Percentile

The p th percentile is a value such that p percent of the


observations fall below or at that value.

2-57 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Quartiles

Figure 2.14 The Quartiles Split the Distribution Into Four Parts. 25% is below the first
quartile (Q1), 25% is between the first quartile and the second quartile (the median, Q2), 25%
is between the second quartile and the third quartile (Q3), and 25% is above the third quartile.
Question: Why is the second quartile also the median?

2-58 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


SUMMARY: Finding Quartiles

▪ Arrange the data in order.

▪ Consider the median. This is the second quartile, Q2.

▪ Consider the lower half of the observations (excluding


the median itself if n is odd). The median of these
observations is the first quartile, Q1.

▪ Consider the upper half of the observations (excluding


the median itself if n is odd). Their median is the third
quartile, Q3.

2-59 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Example: Cereal Sodium Data

Consider the sodium values for the 20 breakfast cereals. What are the
quartiles for the 20 cereal sodium values? From Table 2.3, the sodium values,
in ascending order, are:

The median of the 20 values is the average of the 10th and 11th
observations, 180 and 180, which is Q2 = 180 mg.

The first quartile Q1 is the median of the 10 smallest observations (in the
top row), which is the average of 130 and 140, Q1 = 135 mg.

The third quartile Q3 is the median of the 10 largest observations (in the
bottom row), which is the average of 200 and 210, Q3 = 205 mg.

2-60 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


The Interquartile Range (IQR)

The interquartile range is the distance between the third


quartile and first quartile:
IQR = Q3 − Q1
IQR gives the spread of middle 50% of the data.

In Words: If the interquartile range of U.S. music teacher salaries equals $16,000, this
means that for the middle 50% of the distribution stretches over a distance of $16,000.

2-61 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Detecting Potential Outliers

Examining the data for unusual observations, such as


outliers, is important in any statistical analysis. Is there a
formula for flagging an observation as potentially being an
outlier?

The 1.5 x IQR Criterion for Identifying Potential Outliers


An observation is a potential outlier if it falls a distance of
more than 1.5 x IQR below the first quartile or a distance of
more than 1.5 x IQR above the third quartile.

2-62 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Five-Number Summary of Positions

The five-number summary is the basis of a graphical display


called the box plot, and consists of

▪ Minimum value

▪ First Quartile

▪ Median

▪ Third Quartile

▪ Maximum value

2-63 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


SUMMARY: Constructing a Box Plot

▪ A box goes from Q1 to Q3.

▪ A line is drawn inside the box at the median.

▪ A line goes from the lower end of the box to the


smallest observation that is not a potential outlier and
from the upper end of the box to the largest
observation that is not a potential outlier.

▪ The potential outliers are shown separately.

2-64 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Example: Box Plot for Cereal Sodium
Data

Figure 2.15 shows a box plot for the sodium values. Labels
are also given for the five-number summary of positions.

Figure 2.15 Box Plot and Five-Number Summary for 20 Breakfast Cereal Sodium Values.
The central box contains the middle 50% of the data. The line in the box marks the median.
Whiskers extend from the box to the smallest and largest observations, which are not identified
as potential outliers. Potential outliers are marked separately. Question: Why is the left whisker
drawn down only to 50 rather than to 0?

2-65 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Side-by-Side Box Plots Help to Compare
Groups
A box plot does not portray certain features of a distribution, such as
distinct mounds and possible gaps, as clearly as does a histogram.
Box plots are useful for identifying potential outliers.

Figure 2.16 Box Plots of Male and Female College Student Heights. The box plots use the
same scale for height. Question: Do the quartiles given under Descriptive Statistics match
those shown in the box plot for each group?

2-66 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Z-Score

The z-score also identifies position and potential outliers.

The z-score for an observation is the number of standard


deviations that it falls from the mean. A positive z-score indicates
the observation is above the mean. A negative z-score indicates
the observation is below the mean. For sample data, the z -score
is calculated as:
observation − mean
z = .
standard deviation

An observation from a bell-shaped distribution is a potential outlier


if its z-score < -3 or > +3 (3 standard deviation criterion).

2-67 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Section
2.6
Linear
Transformations
and
Standardizing

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Linear Transformations

x−x
The z-score z = is an example of a linear transformation
of observations. s

In practice, think of linear transformations as scaling (multiplying


or dividing) and/or shifting (adding or subtracting) the
observations.

A linear transformation takes the value x of the original


measurement and transforms it into the new value y according to
the formula y = c + dx, where c and d are given constants.

2-69 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Effect of Linear Transformations on the
Distribution

A linear transformation converts observations from one set of units


to another through the formula y = c + dx, where x are the original
observations, y are the transformed observations, and c and d are
given constants.
▪ The shape of the distribution does not change under linear
transformations.

▪ The mean 𝑦ത of the transformed observations can be computed from


the mean 𝑥ҧ of the original observations through 𝑦ത = c + d𝑥.ҧ The same
is true for the median (or any other percentiles): Median of y = c + d
(Median of x).

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Effect of Linear Transformations on the
Distribution

▪ The standard deviation 𝑠𝑦 of the transformed observations can


be computed from the standard deviation 𝑠𝑥 of the original
observations through 𝑠𝑦 = 𝑑 𝑠𝑥 , where 𝑑 is the absolute
value of 𝑑. In particular, the amount 𝑐 by which observations
are shifted does not affect the standard deviation. The same
logic and formula holds true for the IQR: 𝐼𝑄𝑅𝑦 = 𝑑 𝐼𝑄𝑅𝑥 .

This means that the amount c by which we shift (by adding or


subtracting c) the original observations does not affect the
standard deviation or the IQR.

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Example: Fees and Markups

An electronics retailer receives a shipment of various models of


brand new phones from a smartphone manufacturer. The average
price the retailer pays the manufacturer per smartphone equals
𝑥ҧ = $800, with a standard deviation of 𝑠𝑥 = $100.

2-72 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Example: Fees and Markups
a. To recuperate fixed costs for operating its business,
suppose the retailer decides to add a $10 fee to the
manufacturer’s price. If x denotes the manufacturer’s price
and y denotes the price the retailer wants to sell the phone
for, what is the mean retail price of all smartphones in the
shipment? What is their standard deviation? (Hint: First, find
the constants c and d for this linear transformation.)
Solution When adding $10 to the manufacturer price to determine
the retail price for each smartphone, the mean retail price is $810
and the standard deviation of the retail prices is $100. The text
provides additional details.

2-73 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Example: Fees and Markups
b. Instead of adding a constant $10 fee to the
manufacturer’s price, suppose the retailer decides to
add 10% to the manufacturer’s price of each
smartphone. What are the constants c and d for this
linear transformation and what are the mean and
standard deviation of the retail prices now?
Solution
When increasing the manufacturer’s price by 10% to
determine the retail price for each smartphone, the
mean retail price is $880 and the standard deviation of
the retail prices is $110. The text provides additional
detail.

2-74 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Example: Fees and Markups
c. In reality, the retailer first applies a 10% markup and then
adds an additional $10 fee to the manufacturer’s price for
determining the retail price. What are the constants c and d
for such a linear transformation and what are the mean and
standard deviation of the retail prices?
Solution
When increasing the manufacturer’s price by 10% and then
adding another $10 to determine the retail price for each
smartphone, the mean retail price is $890 and the standard
deviation of the retail prices is $110. The text provides
additional details.

2-75 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Standardizing Variables

Here are two important facts about z-scores:


▪ z-scores have mean 0
▪ z-scores have standard deviation 1

We call a variable with such properties (mean = 0, standard


deviation = 1) a standardized variable and the process of
transforming a variable to z-scores as standardizing a
variable.

2-76 Copyright © 2021, 2017, and 2013, Pearson Education, Inc.


Section
2.7
Recognizing and
Avoiding
Misuses of
Graphical
Summaries
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Summary: Guidelines for Constructing
Effective Graphs

▪ Label both axes and provide proper headings.

▪ To better compare relative size, the vertical axis should start


at 0.

▪ Be cautious in using anything other than bars, lines, or points.

▪ It can be difficult to portray more than one group on a single


graph when the variable values differ greatly. Consider
instead using separate graphs, or plotting relative sizes such
as ratios or percentages.
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Example: Beware of Poor Graphs

Figure 2.19 An Example of a Poor Graph. Question What’s misleading about the
way the data are presented?

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Example: Beware of Poor Graphs

Figure 2.20 A Better Graph for the Data in Figure 2.19. Question: What trends do
you see in the enrollments from 2004 to 2012?

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