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What Are the Consequences of Excessive Optimism or Pessimism in Forecasting

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Essay

What are the consequences of excessive optimism or pessimism in forecasting expected project cash flows?


Definitions:

Normal Good

A good whose demand increases as consumers' income rises, holding all other factors constant.

Students' Incomes

The earnings received by students from part-time jobs, stipends, or scholarships, contributing to their financial support.

Demand

The amount of a product or service that buyers are ready and can afford to buy at different price points within a specified time frame.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

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