Two towns both have a mean income for their residents of $30,000. The standard deviation of incomes of residents in town A is $2600, and the standard deviation of incomes of residents in town B is $25,000. Explain what this says about the difference in the distribution of incomes in the two towns.

Question

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The Answer is In town A, the mean income is $30,000 and almost all residents earn between $20,000 and $40,000. The standard deviation of $2600 says incomes do not vary much among residents of the town. In town B, since the standard deviation is $25,000, we know that there are very poor residents and very rich residents even though the mean income is also $30,000.

Two Towns Both Have a Mean Income for Their Residents