Which measure of central location is used to determine an average annual percent increase?
A)arithmetic mean
B)weighted mean
C)geometric mean
D)median

Question

Quizplus · Accepted Answer

The geometric mean is the appropriate measure of central location to determine an average annual percent increase because it takes into account the compounding effect of percentages. For example, if we want to determine the average annual percent increase of a certain investment over a period of 5 years, using the arithmetic mean would not accurately reflect the compounding effect, whereas the geometric mean would. Therefore, the geometric mean is the best choice for this type of calculation.

Which Measure of Central Location Is Used to Determine an Average