30/08/2021
STATISTICS - 06
Madhu purchased a Gold coin in 2017 for 44000, in year 2018 its value fall by 10% but in 2019 it increased by 20%.
in 2020 it again increases by 15%
But in 2021 it falls by 17%
What is the average growth rate on Gold?
When numbers have an exponential effect we need a more accurate way to find the mean or average. That way is called
"Geometric Mean"
We will discuss it but first, understand what this Geometric Sequence mean
To understand the power of Geometric sequence or exponentially find answers to minister Birbal question
Once King Akbar in India got impressed with his chief minister Birbal. He asked him to ask for anything he wants.
Birbal wanted to show Akbar that he (Akbar) is not the almighty God who can give anything to anybody. So he asked him
My King, please bring chess. Put a sack of wheat in the first box and 2 in the second 4 in 3rd, 8 in 4th, and 16 in 5th keep multiplying the sacks of the preceding box with 2 to find the following box numbers and then
Ask your treasury to give me the number of wheat sacks he will be able to put in the 64th box of chess.
1,2,4,8,16,32,64,128,256,512,1024,2048,4096,8912,17824,35648,71296,142592,285184,570368,1140736,2281472,4562944,9125888,18251776,36503552,73007104,146014208,292028416,584056832,....
30th Box only and all ministers exhausted. Forget about the 64th box King does not have half of the wheat that Birbal asked as a reward.
This is the power of Geometric Progression.
Compounding interest is another and very common application of geometric progression.
We will discuss the Geometric mean soon.