Expected value, Microeconomics

Assignment Help:

Expected Value

- The weighted average of payoffs or values resulting from all the possible outcomes.

  • The probabilities of every outcome are used as weights
  • Expected value measures central tendency; payoff or value expected on an average

- An Example

  • Investment in drilling exploration:
  • The outcomes that are possible is two

-  Success -- stock price increase from $30 to $40/share

-  Failure -- stock price decrease from $30 to $20/share 


Related Discussions:- Expected value

Role of infrastructure in the economy, ROLE OF INFRASTRUCTURE IN THE ECONOM...

ROLE OF INFRASTRUCTURE IN THE ECONOMY: Economic Infrastructure produces services that directly facilitate and are basic to the carrying out of a wide variety of economic activ

Conventions as a basis for forming expectations, Conventions as a Basis for...

Conventions as a Basis for Forming Expectations : Since there is little objective basis for probability distributions about future yields, decision-makers have to act on the ba

Cells electromotive force, Defining Cells Electromotive Force: The main ob...

Defining Cells Electromotive Force: The main objective of this particular aspect of Physical Chemistry is to examine the relation between free energies and the mechanical energy o

Essentials of development administration for economics, Essentials of Devel...

Essentials of Development Administration  Development administration, to be effective and efficient, needs to have the following ingredients:  Administrative Innovation:

Describe the role of capital in modern productive system, Production withou...

Production without capital is hard for us even to imagine. Nature cannot furnish goods and materials to man unless he has the tools and machinery for mining farming forestry fishin

Demands for the two market are P1=15-, demand for two market are P1=15-Q1&P...

demand for two market are P1=15-Q1&P2=25-Q2.the monopoly TC is C=5+3(Q1+Q2).What are ,output,profit&MR if the monopolist can price disc? riminate

Objective probability, The Objective Probability -  100 explorations out...

The Objective Probability -  100 explorations out of which 25 successes and 75 failures -  Probability (Pr) of success = 1/4 and probability of failure = ¾ Given: -

Absolute and comperitive advantage, If one person can produce 1 fish and 10...

If one person can produce 1 fish and 10 oranges per hour and works 5 hours a day.another person can produce 2 fish and 20 oranges per 2 hors and works 8 hurs a day then who has the

Perfect competition, i when should continue to produce in the short run

i when should continue to produce in the short run

Macroeconomics, Consider the following: The city council has just approved ...

Consider the following: The city council has just approved the construction of a water park in your town. You are responsible for studying the impact of the new water park on the l

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