The derivation of the percent error formula is straightforward and rooted in the concept of relative difference.
Step 1: Calculate the Absolute Error
First, we find the simple difference between the two values and take its absolute value to quantify the magnitude of the error, regardless of direction. This is the 'Absolute Error'.
Absolute Error = |Observed Value - True Value|
Step 2: Calculate the Relative Error
Next, to understand the error in context, we compare it to the true value. This is the 'Relative Error', which is a fractional value.
Relative Error = Absolute Error / True Value
Step 3: Convert to a Percentage
Finally, to make the relative error more intuitive and easily comparable, we multiply it by 100 to express it as a percentage.
Percent Error = Relative Error * 100%