Comparing Probability and Non-Probability Sampling Techniques
You will recall that simple random sampling, stratified random sampling, and cluster sampling are types of probability sampling techniques. On the other hand, convenience sampling and judgemental sampling are types of non-probability sampling techniques. Probability Sampling Methods Simple Random Sampling…
Sampling Error Explained
Sampling error is the statistical error that occurs when an analyst selects a sample that is not representative of the population as a whole. In other words, it is the difference between the observed value of a sample statistic (mean,…
Probability and Non-Probability Sampling
A population is the total number of elements in a group while a sample is a portion of the population. Sample statistics—quantities such as sample mean that describe sample data—generalize the information about the population parameter. As such, we draw…
Economies and Diseconomies of Scales
Economies of Scale Economies of scale refer to the cost advantage brought about by an increase in the output of a product. Economies of scale arise due to the inverse relationship between the per-unit fixed cost and the quantity produced…
Break-even and Shut-down Points of Production
Break-even Point of Production The break-even point can be defined as the production and sales levels of a given product at which the revenue generated from the sales is perfectly equal to the production cost. At this point, the company…
Law of Diminishing Marginal Returns
The law of diminishing marginal returns states that the marginal return from an increased input, say labor, will decrease when this input is added continually to a fixed capital base. Example: Law of Diminishing Marginal Returns A good example is…
Normal and Inferior Goods
Normal Goods Normal goods are goods whose demand increases with an increase in consumers’ income. Note that the rate at which demand increases is lower than the rate at which income increases. The rate eventually slows down with further increments…
Income and Substitution Effects
Substitution Effect A substitute is a good that satisfies the same need as another good, e.g., broccoli and cauliflower. The substitution effect states that a good becomes more of a bargain relative to other goods as its price declines; therefore,…
Income Elasticity, Price Elasticity, and Cross Elasticity
Elasticity measures the sensitivity or responsiveness of one variable to another. There are three main forms of elasticity – price elasticity, income elasticity, and cross-price elasticity. Price Elasticity Price elasticity of demand is a measure of how a product’s demand…
Operating, Business, Sales, and Financial Risks
Risk can be defined in several ways. However, one fairly simple definition is that “risk refers to the uncertainty of a return and the potential for financial loss.” Risk can arise from financing and operating activities and can be classified…
