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

Shutdown point, when does a buisness reach shutdown point

when does a buisness reach shutdown point

., wHEN WAGE IS $6.05, HOW MANY HOURS ARE WORKED A WEEK?

wHEN WAGE IS $6.05, HOW MANY HOURS ARE WORKED A WEEK?

Elasticity, 1. What are the uses of elasticity to the public sector and pri...

1. What are the uses of elasticity to the public sector and private sector? (20 marks)

Capital, Capital: Broadly defined, capital represents tools that people use...

Capital: Broadly defined, capital represents tools that people use when they work, to make their work more efficient andproductive. Under capitalism, capital can also refer to a su

The supply function, price quantity 10 60 20 70 30 90 40 110 50 130 der...

price quantity 10 60 20 70 30 90 40 110 50 130 derived a supply function for the relation between price and quantity

Explain about neoliberalism, Q. Explain about Neoliberalism? Neoliberal...

Q. Explain about Neoliberalism? Neoliberalism: A modern, harsher incarnation of capitalism that became dominant globally beginning in early 1980s, largely as a reaction to inte

Explain the issue using a ppf, A country s choice among the production of e...

A country s choice among the production of education and nuclear submarines is an issue of opportunity cost. Explain the issue using a PPF. Resources are limited whereas

.redox, how to write an half equation

how to write an half equation

When is the economic theory useless, When is the economic theory useless? ...

When is the economic theory useless? One misunderstanding is to under-estimate the role of an economic theory. Several people thought an economic theory useless since they thin

Law of diminishing marginal utility, law of diminishing marginal utility it...

law of diminishing marginal utility its assumptions, limitation, and its practical importance

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