Tool Manufacturing has an expected EBIT of $65,000 in perpetuity and a tax rate of 21 percent. The firm has $190,000 in outstand
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It is to be noted that the company is not allocating resources efficiently. See the attached image for the Graphically illustration required.
<h3>What is allocation of resources?</h3>This is simply the ability to efficiently distribute resources across all aspects of production.
<h3>What is the proof that the company is misappropriating resources?</h3>MRS is the gradient of the budget line is defined by the change in the Y axis divided by the change in the x axis.
In other words, MRS is the number of units of x that a customer is ready to give up in exchange for units of y.
Note that
the MRS fo the budget line is:
-dy/dx
= -10.6/6.25
= -1.6, that is media 1.6 units of media is given for every unit of business travel.
However, the corporation claims that the MRS is -1, which indicates that for every unit of business trip, they give away one unit of media. In other words, they are paying a price equal to the cost of business travel, resulting in a resource misappropriation.
Learn more about allocation of resources at;
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