In Markov analysis, the likelihood that any system will change from one period to the next is revealed by the
A)cross-elasticities.
B)fundamental matrix.
C)matrix of transition probabilities.
D)vector of state probabilities.

Question

Quizplus · Accepted Answer

The matrix of transition probabilities is used in Markov analysis to determine the likelihood that a system will change from one period to the next. Each element in the matrix represents the probability of transitioning from one state to another in the next period. The sum of the probabilities in each row must add up to 1, as the system must end up in some state in the next period. The matrix of transition probabilities is a fundamental tool in Markov analysis.

In Markov Analysis, the Likelihood That Any System Will Change