An attempt to analyse a question in a pure math/econ/finance way. PT 31-S2-Q8

Giant PandaGiant Panda Alum Member
in General 274 karma
For those who have a math or econ or business background.

We learned that of any financial or math model, there are 2 kinds of variables-Endogenous and Exdogenous. And from macro-econ or Linear Algebra, the change of an endogenous variable does not change the model it self, as such, moving from X to X' is only a result of Y to Y'. And it does not move us to Z to Z', which needs the introduction of an exdogenous variable into the equation.

The exact same method is applied here.

By the question steam, you are able to formulate a principle, or a math equation, and the math equation only applies in this particular set of population-the population of dangerous activity.

Furthermore, if you think of dangerous activity be on your x axis and tax as on the y axis, the fact that dangerous activity does not result in tax on those activity can be thought as a correlation set where you can denote a +1 or - 1direction.

As such, by the question steam, "by the same token", we plug in variables, as we know that these are endogenous and push out a Y'.

Answer choice D perfectly describes the result of MBT from this answer choice while answer choice B does the opposite.

Answer choice A/E describes 2 phonomena. Answer choice E describes "food and shelter", which are variables that cannot be accounted for. And answer choice A "nonessential sports equipment and recreational gear" describes another market or population set. As you know, we cannot slap an equity valuation model onto an alternative asset valuation model, they are simply different kind of assets.


  • Giant PandaGiant Panda Alum Member
    274 karma
    Questions that the method can be also applied to are: PT 33-S3-Q9, PT31-S3-Q10

  • brennanbrennan Free Trial Member
    50 karma
    I don't think this really has to do with math. Maybe stats or applied math.

    By the way, I can't find what question you mean. PT 31-S2-8 for me is something about eggs and sperm being needed for reproduction in reptiles.
  • Giant PandaGiant Panda Alum Member
    274 karma
    Another reference: PT, 31-S2, Q15.

    The same thing happens again here by in different form. However, much of the way to solving it remains the same.

    Within this case, there are 2 models that can be framed. The 2 models are divided due to an incident of a law that breaks them apart.

    In addition, we need to take note on the change between market share and sales volume, which should be very easy if you have a finance/econ background.

    But before going into any further, I just want to point out just how similar C/D/E, wrong answer choice does the same thing. They are all exogenous variables or in another words describing an entire different market.

    C: "If the emission standard had not been imposed..." this is another market.
    D: "If the emissions standards remain in effect..." this pushes above the time limit that we are given. (This is best understood in economic or finance as the case of a present value calculation. If suppose you are only giving a 5 year annual cash flow of an fix asset with 0 coupon, interest rate of 1% then the PV is just those CF dated all time 0. However, beyond these time frame, the bond is thus expired or terminated. The same logic applies here. The question itself is the bond. You are limited by what it gives. As such, if you push above the time frame, then effectively you enter into the unknown territory)
    E: "profit", this introduces again another different model or the market.

    With this in mind, we turn to answer choice B. This answer choice is a MBT. When party A sales constant, while market share doubled. One logical reason is by the entire market total sales volume had gone down. As such, it is a logical inference.

    And A does the opposite.

    But in any case, do note that the answer choice is confined with its own space and market.
  • Giant PandaGiant Panda Alum Member
    274 karma

    Here is the question:

    And to clarify, I am not talking about math or stat. I think you may have misunderstood my point. The point is of understanding of all its foundation rest on the point of how universal or limited a model is and what is accounted as an endogenous variable and an exogenous variable.

    For MBF questions, this is especially applicable. The question essentially lays out a model where the correct answer choice will all be exogenous variables or, translating into finance, describing different asset market.

    And the model in itself have constraints. If for instance, the question pushes the time boundary and describe a serious of phon then the time point is then locked to that framework. Reference to the car sales example in one of the MBT lesson. As such, we cannot go below or beyond the implied time frame.

    Likewise, when a sufficient condition is placed to trigger a serious of necessary condition, the sufficient condition becomes in itself a distinct. Any other market that deviates from this market becomes an unjustified connection, which in MBF is correct and MBT, wrong.

  • Giant PandaGiant Panda Alum Member
    274 karma
    Using this model, if we dive into another question: PT34-S3-Q22

    Through this understanding, the question can be solved very fast. The market or model that is limited in this case are of the following:

    Random Mutation can cause alternation of virus to greater complexity and be dangerous.

    And going into the answer choice, the only left over answer is A/E and the rest can be eliminated very fast.

    Answer B: Some organism of greater complexity is a deviation from the model in which the model we are focused here are viruses that has been randomly mutated. Without further reading, the answer is deleted.

    Answer C: Some microorganism that are more complex. Once again, this is of the same problem above. This speaks of another market or population set. We only know those randomly mutated virus that can be dangerous.

    Answer E: Some virus that fail to kill other virus. Once again, another population set. Deviation from our initial model knowledge.

    So you are left with A/E.

    First you look at A, this answer choice can be eliminated by how careful you frame your model. Notice that when I used by model, I used the word "can". Can is a word that is framed directly from the question itself, which used the word "could". And this means that it is not 100%. Therefore, it is valid to draw the assumption that of "some" as certain outlier is not denied.

    And answer choice E becomes the final candidate.

    Time wise: Reading question 30s. Elimination of B/C/E: 15s. Final contender of A: 10s. Then E selected.

    Total cost of time is 65s. Additional time banked into the time bank for other questions.
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