An Investor Is Keeping a Careful Eye on the Real

question 100

Essay

An investor is keeping a careful eye on the real estate markets in Las Vegas and the Inland Empire.The following are her predictions for the real estate market in 2016.
• With 0.32 probability,foreclosures will increase in Las Vegas.
• With 0.46 probability,foreclosures will increase in Las Vegas or the Inland Empire.
• With 0.27 probability,foreclosures will increase in Las Vegas and the Inland Empire.
What is the probability that foreclosures will increase in the Inland Empire given that they increased in Vegas?

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Definitions:

Long-Run Average Cost Curve

A graphical representation showing how the average cost of production changes as the scale of production is altered over the long term, reflecting economies and diseconomies of scale.

Minimum Cost

The lowest possible cost at which a particular quantity of goods or services can be produced or obtained, while still maintaining efficiency and effectiveness.

Increasing Return to Scale

When an increase in the amount of inputs results in a disproportionate increase in the output produced.

Increasing Return to Scale

A situation in which output increases by a larger proportion than the increase in inputs in the production process.