Search results
Results From The WOW.Com Content Network
According to the figure, a bull week is followed by another bull week 90% of the time, a bear week 7.5% of the time, and a stagnant week the other 2.5% of the time. Labeling the state space {1 = bull, 2 = bear, 3 = stagnant} the transition matrix for this example is
On the contrary of restricting direct empirical evaluation, the constant Elasticity of Substitution are simple to use and hence are widely used. [1] McFadden states that; The constant E.S assumption is a restriction on the form of production possibilities, and one can characterize the class of production functions which have this property.
Under the standard assumption of neoclassical economics that goods and services are continuously divisible, the marginal rates of substitution will be the same regardless of the direction of exchange, and will correspond to the slope of an indifference curve (more precisely, to the slope multiplied by −1) passing through the consumption bundle in question, at that point: mathematically, it ...
An unbiased random walk, in any number of dimensions, is an example of a martingale. For example, consider a 1-dimensional random walk where at each time step a move to the right or left is equally likely. A gambler's fortune (capital) is a martingale if all the betting games which the gambler plays are fair.
For example, if you study, you can not see your friends. However, you will get a good grade in your course. In this scenario, we analyze personal preferences and beliefs and will be able to predict which option a person might choose (e.g., if someone prioritizes their social life over academic results, they will go out with their friends).
The substitution effect is the effect that a change in relative prices of substitute goods has on the quantity demanded. It due to a change in relative prices between two or more substitute goods. When the price of a commodity falls and prices of its substitutes remain unchanged, it becomes relatively cheaper in comparison to its substitutes.
In order for substitution to be defined, one needs an algebraic structure with an appropriate universal property, that asserts the existence of unique homomorphisms that send indeterminates to specific values; the substitution then amounts to finding the image of an element under such a homomorphism.
In economics and game theory, the decisions of two or more players are called strategic complements if they mutually reinforce one another, and they are called strategic substitutes if they mutually offset one another.