Aggregation Reduces the Standard Deviation of Demand

question 56

Multiple Choice

Aggregation reduces the standard deviation of demand

• A) only if demand across the regions being aggregated is perfectly positively correlated.
• B) only if demand across the regions being aggregated is not perfectly positively correlated.
• C) even if demand across the regions being aggregated is not perfectly positively correlated.
• D) whenever demand across the regions being aggregated is not perfectly positively correlated.

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Definitions:

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