All categories

4 years ago

What is meant by allocative efficiency? allocative efficiency is when every good or service?

1 answer:

7 0

Allocative efficiency is the state of the economy in which production suits consumer needs and preferences. Every good or service produced holds value. Even the last unit is able to serve the customer and satisfy them, but the product must also maintain an equal balance between cost effectiveness and user satisfaction.

You might be interested in

Stock Y has a beta of 1.4 and an expected return of 14.7 percent. Stock Z has a beta of .7 and an expected return of 8.7 percent

jek_recluse [69]

Answer:

Stock Y is undervalued because the reward-to-risk ratio for Stock Y is higher than the SML

Stock Z is overvalued because the reward-to-risk ratio for Stock Z is lower than the SML

Explanation:

From the question,

It is given:

FOR STOCK Y

Stock expected return = 14.7%

Stock beta = 1.4

risk-free rate is 5.2%

The Reward-to-risk ratio is given by the difference between the stock expected return and risk free rate divided by the stock beta.

Therefore

Reward-to-risk ratio for stock Y = (14.7% - 5.2%)/1.4

= 6.79%

FOR STOCK Z

Stock expected return = 8.7%

Stock beta = 0.7

risk-free rate is 5.2%

Therefore

Reward-to-risk ratio for stock Z = (8.7% - 5.2%)/0.7

= 5%

FOR SML

market risk premium = 6.2%

Risk rate = 5.2

Therefore

Reward-to-risk ratio for SML = (6.2%)/6.2 - 5.2

= 6.20%

Stock Y is undervalued because the reward-to-risk ratio for Stock Y is higher than the SML

Stock Z is overvalued because the reward-to-risk ratio for Stock Z is lower than the SML

3 0

4 years ago

Read 2 more answers

Most Solutions, Inc., issued 12% bonds, dated January 1, with a face amount of $420 million on January 1, 2021. The bonds mature

Fantom [35]

Answer:

Most Solutions, Inc.

Amounts related to the bonds that Most would report in its statement of cash flows for the year ended December 31, 2021:

Operating activities:

Interest payments -$50.4 million

Financing activities:

Bonds issue $375,505,452

Explanation:

a) Data and Calculations:

January 1, 2021:

Face value of bonds issued = $420 million

Maturity period of bonds = 10 years (2031)

Coupon interest rate = 12%

Market yield = 14%

Payment of interest expense = semiannually (June 30 and December 31)

Debit Cash (price) 375,505,452

Debit Discount on bonds (difference) 44,494,548

Credit Bonds payable (face amount) 420,000,000

To record the bonds proceeds and discount.

Cash payments for Bonds Interests:

June 30 $25.2 million

December 31 $25.2 million

3 0

3 years ago

Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually.

aleksley [76]

Answer:

a) Future Value = $530

b) Future Value = $561.8

c) Present Value =$566.037

d) Present Value =$533.99

Explanation:

FV = PV × (1+r)^n

FV -future Value , r- interest rate,n- number of years , PV-present Value

FV = 500 ×(1.06)^1 =

Future Value = $530

FV = 500 × 1.06^2 =

Future Value = $561.8

c) Present Value

PV = FV × (1+r)^(-n)

PV = 600 ×1.06^(-1)=566.037

Present Value =$566.037

PV = FV × (1+r)^(-n)

FV -future Value , r- interest rate,n- number of years , PV-present Value

PV = 600 ×1.06^(-2) = 533.99

Present Value =$533.99

a) Future Value = $530

b) Future Value = $561.8

c) Present Value =$566.037

d) Present Value =$533.99

3 0

3 years ago

In order for martha to categorize prospective buyers into groups that have common needs and will respond similarly to a marketin

prisoha [69]

There are four methods in order for Martha to sell her product to prospective buyers:
1. Know the principal attributes of a product.
2. Find how the customers rate are choosing these with respect to these attributes.
3. Find where the company's product is on these attributes in the customers mind
4. Place the company in a different poition in the minds of the customers.

8 0

4 years ago

Your Competitive Intelligence team reports that a wave of product liability lawsuits is likely to cause Baldwin to pull the prod

Alex73 [517]

Answer:

Consider the following calculations.

Explanation:

Five companies in the core segment are Abby, Brat, Bat, Cent and Clack

Calculation Total Production Capacity :-

Consider the attached archive.

Total Production Capacity to determine the industry's Current Capacity to produce in the core

segment without Brat.

Production Capacity = 7025 - 1250 = 5775

The Companies can work in two shifts.

Total Production Capacity = 5775 * 2 = 11550

The Answer is "11550".

Download xlsx

8 0

3 years ago

What is meant by allocative​ efficiency? allocative efficiency is when every good or service?

What is meant by allocative efficiency? allocative efficiency is when every good or service?