What does weighted average mean?
An average in which each quantity that is being averaged is assigned a weight. The weightings determine the relative contribution of each quantity to the average. Weightings are the equivalent of having that many like items with the same value involved in the average. Investopedia explains Weighted Average To demonstrate this concept, take the value of letter tiles in the game Scrabble. Value: 10 8 5 4 3 2 1 0 Occurrences: 2 2 1 10 8 7 68 2 To average these values, do a weighted average by using the number of occurrences of each value as the weight. To calculate a weighted average, do the following: Step 1: Multiply each value by its weight. (Answer: 20, 16, 5, 40, 24, 14, 68, and 0.) Step 2: Total all the values from Step 1. (Answer: sum = 187.) Step 3: Total the occurrences (weights). (Answer: sum = 100.) Step 4: Divide the total of the values by the total occurrences (weights). (Answer: 187/100.) Step 5: The average value of a Scrabble tile is 187/100 = 1.87.
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