Intro to Business Statistics

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Variances

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Intro to Business Statistics

Definition

Variances measure the spread of data points in a dataset relative to the mean. In ANOVA, it is used to determine the variability within and between groups.

5 Must Know Facts For Your Next Test

  1. In one-way ANOVA, variances are essential for determining if there are statistically significant differences between group means.
  2. The F-distribution is used to compare the variances of different groups in ANOVA.
  3. Variance within groups measures variability due to random error, while variance between groups measures variability due to treatment effects.
  4. A higher variance between groups compared to within groups often indicates a significant difference among group means.
  5. Calculating variances involves squaring deviations from the mean, summing them up, and then dividing by the number of observations.

Review Questions

  • How is variance used in one-way ANOVA?
  • What does a large variance between groups indicate in an ANOVA test?
  • Why is it important to compare variances within and between groups?
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