Question

Prices usually allocate resources efficiently because they allocate:

Answer 1

Answer:

The correct answer is letter "A": resources to the lowest value good or service.

Explanation:

Purchase Price Allocation or PPA is the accounting practice in which a company is being purchased by another and the purchase price is allocated according to the assets and liabilities of the organization being acquired. It is said then that the price is allocated efficiently because it is allocated to the lowest value of the assets and liabilities.

Answer 2

Answer: Option (B) is correct.

Explanation:

Correct Option: Resources to the highest value good or service.

Prices normally are able allocate scarce resources efficiently because they will allocate resources in a better way, so that there can be a full utilization of resources.

If the resources are used efficiently and effectively then this will lead to an optimal utilization of the limited resources.