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3 years ago

Business do not maximise output from the given inputs

Business

1 answer:

Ganezh [65]3 years ago

4 0

Answer:

Allocative inefficiency.

Explanation:

Factors of production can be defined as the fundamental building blocks used by individuals or business firms for the manufacturing of finished goods and services in order to meet the unending needs and requirements of their customers.

In Economics, there are four (4) main factors of production and these are;

I. Land.

II. Labor (working).

III. Capital resources.

IV. Entrepreneurship.

When these aforementioned factors of production are combined effectively and efficiently, they can be used for the manufacturing or production of goods and services to meet the unending requirements or needs of the consumers.

Basically, there are two (2) types of inefficiency associated with the production of goods and services to meet the unending requirements or needs of consumers, these includes;

1. Technical (productive) inefficiency: it occurs when a company or business firm produce goods and services that consumers do not want. This is typically as a result of the incorrect and inefficient allocation of scarce resources by a business firm or entity.

2. Allocative inefficiency: it occurs when a company or business firm do not maximise output from the given inputs such as raw materials, capital, etc. Thus, it arises when businesses fail to increase the level of their production or productivity from a number of given inputs.

Hence, when a business do not maximise output from the given inputs, it is referred to as an allocative inefficiency.

In conclusion, allocative inefficiency typically occurs when the price of a good or service isn't equal to its marginal cost i.e P ≠ MC.

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This scenario highlights a specific business practice known as reciprocity.

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2 years ago

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3 years ago

Read 2 more answers

The following two errors were made in the physical inventory counts: 1. 2012 ending inventory was overstated by $33,000. 2. 2013

timofeeve [1]

Answer:

2013: $490,000 2012: $561,000

Question:

Errors in inventory count the following information was taken from the record of Spencer Enterprises

2013 2012

Beginning Inventory $63,000 $83,000

Cost of goods purchased $548,000 $508,000

Cost of goods available for sale $611,000 $591,000

Ending inventory $93,000 $63,000

Cost of goods sold $518,000 $528,000

The following two errors were made in the physical inventory counts:

1. 2012 ending inventory was overstated by $33,000

2. 2013 ending inventory was understated by $28,000.

Compute the correct cost of goods sold for both 2012 and 2013.

Explanation:

Computation of cost of goods sold for the year 2016 and 2015

Particulars 2013 2012

Beginning inventory $63,000 $83,000

Cost of goods purchased $548,000 $508,000

Cost of goods available for sale $611,000 $591,000

Ending inventory (corrected) $121,000 $30,000

Cost of goods sold (corrected) $490,000 $561,000.

note:

In 2013 new ending inventory = $93,000 + $28,000 = $121,000

In 2012 new ending inventory = $63,000 - $33,000 = $30,000

Beginning inventory + Cost of goods purchased = Cost of goods available for sale

Cost of goods available for sale - Ending inventory = Cost of goods sold

3 0

3 years ago

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________. Qu

Viefleur [7K]

When consumers and businesses have greater confidence that they will be able to repay in the future, the quantity demanded of financial capital at any given interest rate will shift to the right.

6 0

3 years ago

Annual maintenance cost for a particular section of highway pavement are $3,000.The placement of a new surface would reduce the

UkoKoshka [18]

Answer:

$17,877

Explanation:

initial outlay = ?

net cash flows years 1 to 5 = $3,000 - $400 = $2,600

net cash flows years 6 to 10 = $3,000 - $800 = $2,200

assuming that the discount rate is 6%, we need to determine the maximum amount of initial investment that would result in the NPV = 0

in order to do this we have to calculate the present value of the future cash flows:

PV = $2,600/1.06 + $2,600/1.06² + $2,600/1.06³ + $2,600/1.06⁴ + $2,600/1.06⁵ + $2,200/1.06⁶ + $2,200/1.06⁷ + $2,200/1.06⁸ + $2,200/1.06⁹ + $2,200/1.06¹⁰ = $17,877

that means that the maximum amount that can be invested = $17,877, and that way the NPV = 0

7 0

3 years ago

Business do not maximise output from the given inputs​

Business do not maximise output from the given inputs