Variability, Microeconomics

Variability

- The extent to which the possible outcomes of uncertain event may vary

* Variability: A Scenario

- Assume that you are choosing between two part time sales jobs which have the same expected income ($1,500)

- The 1st job is based entirely on commission.

- The 2nd is a salaried position.

- There are 2 equally likely outcomes in the 1st job--$2,000 for a good sales job and $1,000 for a modestly successful.

- The 2nd pays $1,510 most of the time (that is .99 probability), but you will earn $510 if company goes out of business (that is .01 probability).

Job 2 Expected Income

* While the expected values are same, variability is not same.

* Greater variability from the expected values signals greater risk. 

Posted Date: 10/10/2012 8:21:03 AM | Location : United States







Related Discussions:- Variability, Assignment Help, Ask Question on Variability, Get Answer, Expert's Help, Variability Discussions

Write discussion on Variability
Your posts are moderated
Related Questions
in the context of managerial economics how do you explain a rational producer.illustrate giving example.


meaning, scope, nature

Consider that the government tells a large monopolistic firm that maximizes profits that it has to pay a fee to the Reelect the President Committee same to one third of its total p

Price elasticity is used in economics to determine the changes in price of goods and services. It measures the change in price demanded and quality supplied. Determinants of pri

Please provide detailed answers, showing all your work, to all five sections in problem 15.9 in the Nicholson and Snyder book. This is an individual take home task due at 11:59pm o

Suppose that in an economy 100 worker-hours produce 160 units of output in year 1. In years 2 and 3 worker hours are 120 and 130 and units of output are 216 and 260, respectively.

During summer of 2006, China increased their reserve requirement for the banking system while maintaining a fixed target for the interbank lending interest rate. Draw a graph of th

using necessary and sufficient conditions explain consumer equilibrium diagrammatically as well as mathematically

Closesubstitute goods: The number of closesubstitute goods The more substitutes of good has and the more close the substitutes are, the more elastic the demand for the good. Fo