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Allocative efficiency criteria are satisfied by the competitive model. Because P = MC, in each market in the economy there is no over- or under- allocation of resources in this economy. This is due to the cost of production for the last unit of production is what shows supply, and that cost of production includes only the engineering costs. Though, this result is obtained only if all industries in that economic system are purely competitive. This is the contribution of the models of distribution formed by economists working in the marginalists traditions. The problem is that this is economic theory that is not essentially supported by empirical evidence.
Price/Earnings (P/E) Ratio This is a measure of an organization investment potential. Literally, a P/E ratio is how much a share is worth per dollar of earnings. The price-earn
ADMINISTRATIVE REFORMS - ECONOMIC POLICY: During the last few decades, phenomenal changes are taking place at a fast rate in the field of science and technology as well as in
Problem 1: (a) Differentiate between positive and negative externalities? Justify your answer using examples. (b) To what extent do government policies influence externali
b) Why is monopoly considered to be generally against public interests, and what policy instruments can be used to regulate monopolies?
What are constant returns to scale? Constant returns to scale: A constant return to scale (CRS) implies that doubling inputs precisely double outputs, which is frequently a
How do we evaluate the value of money? Supply and demand verifies the value of a currency. If demand is high, the value rises, and vice versa. Factors that affect supply and de
Assignments
V alue Additivity In an efficient market the value of any 2 assets can be estimated as the sum of the values of the two individual assets. This is a variation on the theme
Measures used to restrict International Trade: These are taxes imposed on traded commodities as they cross national boarders. These are two main types of tariffs. An import ta
The total demand consists of: 1. New owner demand and 2.A replacement demand The replacement demand tends to grow with the in the total stock with the consumers. Once a pe
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