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Average - Meaning, Importance & Example

Published by MBA Skool Team in Statistics Last Updated: November 16, 2023Read time:

What is Average?

Average means the sum of the numbers divided by the number of numbers. It is also known as the arithmetic mean. Average shows a single value which defines a group of numbers by the ratio of their sum to total count.

Importance of Average

It is also called measure of central tendency i.e. a measure of the central value in the population. It is representative of the entire data. If X is the average of a dataset, then the numbers to its left and right balance each other. It is easily affected by outliers. It is a term used for discrete random variables whereas for continuous random variables, the term used is Expected value. They are widely used in sociology, economics, meteorology, etc. This concept is used in our day to day lives as well here we want to understand how much money we spend per week or fuel consumed per mile etc. 

Formula of Average

The formula is given as:

Avg = (a1 + a2 + a3 + .. an) / n

Where a1, a2, a3.. an are numbers in a series and n is the total quantity of numbers

Example- Avg of 2,4 and 6 is calculated as (2+4+6)/3 = 4

Examples of Average

There are several examples which highlight how the value is calculated and is important is our day to day lives.

1. The mileage of vehicles or cars is an avg value. This shows the performance of a car i.e. how much fuel is used for the distance traveled. If the car covers a larger distance on lower consumption, it is a good car.

2. In cricket, batting avg is the number of runs the batsman scores to the number of times he bats. The higher the score per innings show that the player is good as compared to someone who doesnot score many runs per innings

3. Calculating averages of marks is a common practice in schools and colleges. This helps decide the rank of students based on the marks across several subjects.

Hence, this concludes the definition of Average along with its overview.

This article has been researched & authored by the Business Concepts Team which comprises of MBA students, management professionals, and industry experts. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.

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