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Frank H. Knight treated profit as a residual return to uncertainly profit. Obviously knight made a distinction between risk and uncertainly he divided risk into calculable and non-calculable risks. Calculable risks are those whose probability of occurrence can be statistically estimated on the basis of the available data. For example risk due to the fire, theft accidents etc, are calculable and such risks are insurable. There remains however an area of the risk in which the probability of the risk occurrences cannot be calculated. For instance, there may be a certain element of cost which may not be accurately calculable and the strategies of the competitors may not be precisely assessable. The risk elements of such incalculable events are not insurable. The area of the incalculable risk is the area of the uncertainty. It is in the area of uncertainty that business decision making becomes a crucial function of an entrepreneur. If his decisions are proved right by the subsequent events, the entrepreneur makes profit and vice versa. Thus according to the knight profit arises from the decision taken and implemented under the condition of the uncertainty. In his view the profit may arise as a result of decisions concerning k the state of market, decisions which result in the increasing the degree of the monopoly decisions with respect to holding stocks that holding stocks that give rise to windfall gains, and decision taken to introduce new techniques or innovations.
Question: i) Briefly explain the importance of forecasting for managers? ii) To what extent will managers rely on surveys in business forecasting? iii) What do you mea
Cross-elasticity is the measure of responsiveness of demand for a commodity to the changes in price of its substitutes and complementary goods. For example, cross-elasticity of dem
The pigou effect, also called the real balance effect, is named after the well known Cambridge school economist Arthur Cecil pigou who had first clearly formulated the relationship
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Appropriate Management of Sales: Demand forecasts are made area wise and after that sales targets for various areas are set in view of that. This helps the calculation of sales pe
Objectives of ICAs Most schemes have as their main objective to stabilize and/or increase the world price of commodity, producers' incomes, foreign exchange earnings of export
How will you influence people to strive willingly for group objective in your organization (target based industry)? Apply your interpersonal influence through communication process
the benefits of exchange in the light of the law of association, the introduction of money in direct exchange and way income gets distributed among market participants
assumptions and limitations
Q. Example on Relationship between marginal and average cost? This relationship between marginal and average cost can easily be recalled with the aid of Fig. below. It can be s
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