Question

List and explain the allocation and valuation functions prices in economics

Answer 1

Value is the monetary, material, or assessed worth of an asset, good, or service. Price valuation means the price per Unit. Valuation Price means the price per unit as determined by dividing the Agreed Value by the aggregate number of Units issued and outstanding as of the end of the fiscal period utilized in calculating the Agreed Value. Everyone has slightly different values at any given time, but there are a few common patterns that appear when people evaluate a potential purchase. Assuming the promised benefits of the offering are appealing. The valuation functions are: efficiency, speed, reliability, ease of use, flexibility, status, aesthetic appeal, emotion, and cost.
Efficacy — how well does it work?
Speed — how quickly does it work?
Reliability — can I depend on it to do what I want?
Ease of Use — how much effort does it require?
Flexibility — how many things does it do?
Status — how does this affect the way others perceive me?
Aesthetic Appeal — how attractive or otherwise aesthetically pleasing is it?
Emotion — how does it make me feel?
Cost — how much do I have to give up to get this?
Economic valuation: Economic value/valuation is a measure of the benefit provided by a good or service to an economic agent. It is generally measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service"?
Functions are->
1)Allocating scarce resources among competing uses.
2)Prices serve to ration scarce resources when market demand outstrips supply.
3)Prices adjust to demonstrate where resources are required, and where they are not.
4)For whom to produce, where to produce. Goods and resources are limited, but needs and wants are unlimited; so price will determine affordability and those with the
buying power will have the limited.
5)Prices facilitate matching of demand and supply therefore clearing the market.
Allocative functions of price
Part of the Allocating function is determined which particular resources will be used to produce the desired goods. People’s income will be determined by the quantity and quality of the resources that they have to sell in the market. The more resources that a person possesses and the higher the value the market places on those resources the higher the income an individual will receive. A specific term for this aspect of price signaling is the Distributive Function of pricing. Allocating or signaling, relates to producers and owners. A higher price of Brand X is a signal that the market desires more output of Brand x so producers are given an incentives to hire more resources to produces Brand X. A lower price for Brand X will signal them to devote fewer resources to the production of Brand X. In their search for profits, producers will respond to changing prices by increasing or decreasing production as necessary.