A histogram of neighborhood sale prices shows two distinct peaks. What does this most likely mean?
Correct Answer
C) Two different market segments are present
Why this is correct: A histogram with two distinct peaks (bimodal distribution) strongly suggests the data set combines two different populations or market segments with different central tendencies, such as different property types, sizes, or quality levels within the same neighborhood. Why the other choices are wrong: While a recording error could cause an outlier, it wouldn't typically create two distinct peaks. A small sample size might make the shape unclear but wouldn't cause bimodality. A normal distribution produces a single, bell-shaped peak, not two. Exam tip: Bimodal data often means you are mixing apples and oranges. Separate the data into homogeneous groups before analysis.
Why This Is the Correct Answer
Why this is correct: A histogram with two distinct peaks (bimodal distribution) strongly suggests the data set combines two different populations or market segments with different central tendencies, such as different property types, sizes, or quality levels within the same neighborhood. Why the other choices are wrong: While a recording error could cause an outlier, it wouldn't typically create two distinct peaks. A small sample size might make the shape unclear but wouldn't cause bimodality. A normal distribution produces a single, bell-shaped peak, not two. Exam tip: Bimodal data often means you are mixing apples and oranges. Separate the data into homogeneous groups before analysis.
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