Variability, Microeconomics

Assignment Help:

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.

Insurance market and calculate risk premium, There are two individuals in t...

There are two individuals in town, one is high risk and the other is low risk.1 The probabilities of having an accident for the low risk individual and high risk individual are p

Competitive firm, The Competitive Firm - Price taker - Market ou...

The Competitive Firm - Price taker - Market output (Q) and firm output (q) - Market demand (D) and firm demand (d) - R(q) is straight line Demand and Marginal Re

Scitovsky contour, I don''t really understand how scitovsky contour is form...

I don''t really understand how scitovsky contour is formed.

Determination of exchange rates, DETERMINATION OF EXCHANGE RATES: When...

DETERMINATION OF EXCHANGE RATES: When we study the determinants of exchange rates, we must distinguish between long run determinants and short run because the determinants in

Determine customer satisfaction levels, Periodically, Merrill Lynch surveys...

Periodically, Merrill Lynch surveys its customers to determine customer satisfaction levels. They want to determine the impact of experience on the satisfaction ratings of their co

Fundamental economy problem., how a capitalist system solves the three fund...

how a capitalist system solves the three fundamental economic problems

Compare between perfect competition and monopoly, Question 1: Compare a...

Question 1: Compare and contrast between perfect competition and monopoly. Which of the two types of market structures is efficient? Question 2: Prepare a short notes

Carbon tax, Carbon Tax: An environmental tax that is imposed on products th...

Carbon Tax: An environmental tax that is imposed on products that utilize carbon-based materials and thus contribute to greenhouse gas pollution (comprisinggas, oil, coal and other

Endowendowment, How to solve questions of endowments?

How to solve questions of endowments?

Theory of product pricing, . the condition for second degree of price

. the condition for second degree of price