Question

Consider the four outliers in the 2012 revenue data: companies with revenue of $237 billion, $246 billion, $447 billion, and $453 billion. If we removed these companies from the data set, what would happen to the standard deviation?
a. The standard deviation would remain the same.
b. The standard deviation would increase.
c. The standard deviation would decrease.

Answer 1

Answer:

C) The standard deviation would decrease.

Explanation:

In statistics, an outlier a value that is significantly different to other observed values, it can be either too high or too low.

Since the standard deviation is affected heavily by any outlier, if you remove all of them, then the standard deviation would shrink.