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Suppose the two farmers, A and B, can each earn a high output (H) or a low output (L). The following table describes the probability
Suppose the two farmers, A and B, can each earn a high output (H) or a low output (L). The following table describes the probability of each of the four events. Make sure that you understand what each cell means: you should note that q+str+r= 1. Assume that the output of the two farmers are correlated. Using the variables in the table, how would you capture the idea that outputs of A and B might be (a) positively correlated? (b) negatively correlated? H for A L for A H for B L for B S
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