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. 


Related Discussions:- Variability

Policies of educational financing - earmarking, Policies of Educational Fin...

Policies of Educational Financing - Earmarking Earmarking refers to setting aside and using the funds generated by a special cess/tax for the particular purpose for which it i

Product differentiation, Question: Product differentiation and entry/exit ...

Question: Product differentiation and entry/exit Two differentiated goods, apples and oranges, are located at the two extremes of a linear product space (a segment of length 1)

Homework blues, Is it possible to get an expert to check my homework before...

Is it possible to get an expert to check my homework before I submit it?

Please help, 1. Suppose the banking system has reserve of $750000, demand d...

1. Suppose the banking system has reserve of $750000, demand deposits of $2500000 and a reserve requirement of 20%. a. if the fed now purchases $125,000 worth of govt bonds from t

PPC help, I don''t understand PPC at all

I don''t understand PPC at all

Allocated stock and safety stock - mrp system, Allocated Stock and Safety S...

Allocated Stock and Safety Stock  Allocated stock  A category of stock which ensures that current stock is set aside and not issued under the normal procedure.  Safet

Statistical or analytical methods of demand forecasting, Statistical metho...

Statistical methods are considered to be superior techniques of demand estimation because: a. The element of subjectivity in this method is minimum, b. Methods of es

What do you mean by consumption set, What do you mean by Consumption Set? ...

What do you mean by Consumption Set? Consumption Set: We notice a consumer faced along with possible consumption bundles within consumption set X. We generally assume that X

Describe pay-as-you-go pension plan, Q. Describe pay-as-you-go pension plan...

Q. Describe pay-as-you-go pension plan? Pay-As-You-Go Pension: A pay-as-you-go pension plan sponsor basically just pays for pension benefits to retired plan members out of its

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd