Explain how you know wether an estimate of a product is an overstimate or an underestimate

Estimation is the process of making quick mental calculation of a value, quantity, or number.

We basically do estimation every day of our lives.

For example, we want to order several pizzas. We know that each pizza costs between $5 to $10. We order 3 pizza pies; Pie 1 = $6; Pie 2 = $8; Pie 3 = $9.

In getting an estimate, we either overestimate or underestimate. We know that whether a product of an estimate is overestimated or underestimated by the direction of the rounded up numbers.

We overestimate, when we round up the numbers

We underestimate, when we round down the numbers.

Overestimate: $10 x 3 pizza = $30 total cost

Underestimate: $5 x 3 pizza = $15 total cost

Actual cost: $6 + $8 + $9 = $23

In estimating expenses, it is better to overestimate. This gives us an allowance when incidental expenses incur.

In estimating income, it is better to underestimate. It gives us a more realistic value of the income.