Here are the essential concepts you must grasp in order to answer the question correctly.
Unusual Values
In statistics, an unusual value, often referred to as an outlier, is a data point that significantly differs from the other observations in a dataset. Typically, values that lie beyond 1.5 times the interquartile range (IQR) above the third quartile or below the first quartile are considered unusual. Identifying unusual values helps in understanding the distribution and variability of the data.
Recommended video:
Descriptive Statistics
Descriptive statistics summarize and describe the main features of a dataset. Key measures include the mean, median, mode, range, variance, and standard deviation. These statistics provide insights into the central tendency and dispersion of the data, which are essential for determining whether specific values, like house prices, fall within a typical range.
Recommended video:
Parameters vs. Statistics
Normal Distribution
A normal distribution is a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean. In many cases, house prices can be assumed to follow a normal distribution, allowing for the application of statistical tests to identify unusual values based on standard deviations from the mean.
Recommended video:
Finding Standard Normal Probabilities using z-Table
2:46 minutes
06:50
