Information analysis and management is perhaps the key function of management. Working with the best information available, managers must be able to condense and characterize important economic information so that the best operating and planning decisions can be made.

Population Parameters population parameters

Summary and descriptive measures for the population sample statistics

The population of potential buyers includes those persons who may be favorably disposed to purchase a given product. Just as a complete census of city, county, and state residents is a time-consuming and expensive means for determining characteristics of the local population, a complete census of potential buyers is a costly means for determining the likely customer response to a change in product design, quality, or price. Rather than conduct a cursory analysis of each and every potential buyer, it is often desirable to conduct a detailed analysis of a sample or subset of buyers. Similarly, it is often too expensive or otherwise impractical to test the reliability or cost of each and every unit produced, so the reliability or cost of a sample of products is analyzed instead.

In the absence of a complete and detailed census of the entire population, summary and descriptive measures of the overall population, called population parameters, are not known and must be estimated.

The most effective means for doing so is to rely on sample statistics, or summary and descriptive measures that describe a representative subset of the overall population.

A complete and detailed study of all those factors and individuals that influence the firm's economic environment is seldom practical or even possible. Therefore, the statistical analysis of economic relations usually focuses on the estimation and interpretation of sample statistics rather than population parameters. In the design and application of statistical methods, managers wish to draw important inferences about overall population parameters based on a detailed analysis of sample statistics. The first important class of sample summary and descriptive statistics that managers must consider involves measures of central tendency.

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