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## SS2: ECONOMICS - 1ST TERM

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Lesson 2, Topic 1
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# Variance

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#### Topic Content:

• Define Variance
• Procedure for Calculating Variation

### What is Variance?

This is the average, of the sum of the squares of the deviation, of a set of distributions, from the mean. The square of the deviation is the variance.

When calculating the measure of dispersion, if the square root is not used in the calculation, it shows that the result or answer is the variance.

The formula is

Variance (S2) = $$\frac{\sum \left ( x \: – \: \bar{x} \right )^2}{n}$$

Where

x = Individual observation

$$\scriptsize \bar{x}$$ = Mean value

n = set of numbers

$$\scriptsize\left(x \: – \: \bar{x} \right)$$ = deviation, d

The variance measure is derived by calculating the sum of the square of the differences between each observation and the mean, divided by the number of observations

### Example 2.1.1:

Find the variance of the following set of numbers: 8, 9, 10, 12, 16.

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