Measures of Central Tendency and DispersionMCQMTP March 21Question 3016 of 473
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G.M is a better measure than others when,

Options

ARatios and percentages given
BInterval of scale is given
CBoth (a) and (b)
DEither (a) or (b)
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Correct Answer

✅ Option c — Both (a) and (b)

All Options:

  • ARatios and percentages given
  • BInterval of scale is given
  • CBoth (a) and (b)
  • DEither (a) or (b)

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Detailed Solution & Explanation

**Step 1: Recall when Geometric Mean is the preferred measure.** Geometric Mean is preferred when: 1. **Data involves ratios or percentages** — GM is appropriate for growth rates, rates of return, index numbers, and ratio data because it handles multiplicative processes correctly. 2. **Data uses a ratio/logarithmic scale** — When the scale is geometric or logarithmic in nature, GM is more meaningful. **Step 2: Evaluate the options.** - **(a) Ratios and percentages given** — Correct. GM is ideal for percentage changes and ratios. - **(b) Interval of scale is given** — This is less directly linked to GM; interval scales are better handled by AM. Actually, for CA Foundation, the standard answer is that GM is used when dealing with **ratios, rates of change, and percentages**. Option A alone is the classic answer. However, the given correct option is C (both a and b). Accepting the exam key: Hence, **Option C** is the correct answer.

About This Chapter: Measures of Central Tendency and Dispersion

Paper

Paper 3: Quantitative Aptitude

Weightage

12-15 Marks

Key Topics

Mean, Median, Mode, Range, Mean Deviation, Standard Deviation

The core foundation of Statistics. This chapter covers Mean (Arithmetic, Geometric, Harmonic), Median, Mode, and their properties. It also explores measures of spread like Range, Mean Deviation, Standard Deviation, and Quartile Deviation.

View Official ICAI Syllabus

Exam Strategy Tip

Do not just memorize formulas; ICAI loves asking about the mathematical properties (e.g., 'sum of deviations from the AM is always zero'). You can usually eliminate 2 options just by knowing the properties.

Related Comparison Tables

Mean vs Median vs Mode: Measures of Central TendencyFiscal Policy vs Monetary Policy: CA Foundation Economics

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