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

Explain about gross domestic product, Q. Explain about Gross Domestic Produ...

Q. Explain about Gross Domestic Product? Gross Domestic Product:Value of all the services and goods produced for money in an economy, evaluated at their market prices. Excludes

Perceived value pricing, Perceived Value Pricing This refers to a prici...

Perceived Value Pricing This refers to a pricing strategy that dictates that the price of a given item will be set based on the customer's perception of the value of that item

Calculate currency exchange rate, Question-1 : This question is designed ...

Question-1 : This question is designed to show your understanding of stock market terminology and also the impact of currency exchange rate. You are a Swiss Franc (CHF) based inv

What are the possibilities of returns to scale in production, What are the ...

What are the possibilities of returns to scale in production technology? Three possibilities are there as: technology exhibits (a) constant returns to scale; (b) decreasing ret

Explain monetarist and monetary policy, Explain Monetarist and Monetary pol...

Explain Monetarist and Monetary policy Monetarist:    A group of economists who believe that alters in the money supply are the most effective instrument of government economi

What is marvins optimal bundle, Marvelous Marvin spends his money on muffin...

Marvelous Marvin spends his money on muffins (m) and a composite good (c) (whose price you may assume is $1 throughout this problem). Marvin's utility is U = m + c and his income (

A significant majority of consumers, Normal 0 false false f...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 The demand schedule c

Neer vs reer, NEER Vs REER: In a situation where there are multiple tr...

NEER Vs REER: In a situation where there are multiple trade partners, the effect of cross-currency movements are judged by nominal effective exchange rate (NEER) and real effe

Why the productivity growth slowdown of america in 1973, The Productivity G...

The Productivity Growth Slowdown However in 1973 steady trend of climbing rates of productivity growth stopped cold. Between 1973 and 1995 measured growth in output per worker

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