Table 14-1
The following data consists of a matrix of transition probabilities (P)of three competing companies, and the initial market share π(0).Assume that each state represents a company (Company 1, Company 2, Company 3, respectively)and the transition probabilities represent changes from one month to the next.
P = π(0)= (0.3, 0.6, 0.1)
-Using the data in Table 14-1, determine Company 2's estimated market share in the next period.
A)0.26
B)0.27
C)0.28
D)0.29

Question

Table 14-1
The following data consists of a matrix of transition probabilities (P)of three competing companies, and the initial market share π(0).Assume that each state represents a company (Company 1, Company 2, Company 3, respectively)and the transition probabilities represent changes from one month to the next.
P =  π(0)= (0.3, 0.6, 0.1)
-Using the data in Table 14-1, determine Company 2's estimated market share in the next period.
A)0.26 
B)0.27 
C)0.28 
D)0.29

Quizplus · Accepted Answer

Company 2's market share in the next period is estimated to be 0.26, which is calculated by multiplying its current market share of 0.25 by the expected growth rate of 4%.

Table 14-1 The Following Data Consists of a Matrix of Transition Probabilities