Geometric Mean 1

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The metropolitan area of Los Angeles-Long Beach, California, is the area
expected to show the largest increase in the number of jobs between 1989
and 2002. The number of jobs is expected to increase from 5,160,800 to
6,267,000. (Round your answer to 3 decimal places.) The geometric
mean expected yearly rate of increase is?

Solution:Given-

Vi = initial value = 5,160,800

Vf = final value = 6,267,000

N = number of years = 13

The formula for calculating the geometric mean (also known as the exponential growth rate) is:

R = (Vf / Vi)1 / N

= (6,267,000 / 5,160,800)1 / 13

= 1.214 1 / 13

= 1.015

=> The geometric mean expected yearly rate of increase is 0.015

=> 1 % growth rate per year

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