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Being that inflation is the decrease in the value of the dollar, it causes most firms to lose real value (they may still grow nominally). There are a few exceptions to this. For instance, if a firm is in a lot of debt, inflation helps them by making their debt smaller.

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Are those costs which firm has no control?

Costs which are affected by inflation


What is maximizing a firm value?

Value can be broadly divided as perceived and the realized value. The perceived value is the one that determines the effect of the realized ones. The maximization of the value of firm relates to the concept that how the business of the firm is being perceived as in the business world. Creating a value through ones core competence and making your customer the king of your business helps in building the value of the firm. The firms value acts as the deciding ones for making the clients follow your business. In recent business scenario the profit motif has shifted to the value motif.


What is 'value of a firm'?

The 'value of a firm' is connected with profit maximization. It is the present value of the firm's current profit and the future profit. It determines the value accurately.


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Is the book value of a firm generally synonymous with its strategic value?

No. The "book value" of a firm is based on the outstanding shares, liquidable assets, and cash-on-hand - all recorded financial data. The "strategic value" of a firm may actually be much more than what the firm is work "on the books," as a company acquiring the firm may want to pay more for that strategic value.


What is the scale effect economics?

The scale effect indicates what happens to the demand for the firm's inputs as the firm expands production. As long as capital and labor are "normal inputs," the scale effect increases both the firm's employment and capital stock.


Why should the shareholder of a firm care about maximizing a value of a firm?

the value of a firm determines their wealth.if the value of a firm,which is the market price per share of the total number of shares issued,is increased,invariably the shareholders' return is increased..by John I Agwu


What is the negative effect of a firm's limited capital?

negative effects of a firm limited capital


Advantage of inflation in India's economy?

Inflation is the sustained increase in price level. It usually has negative aspects to inflation, but it has some positive effects as well. Firstly, inflation is more desirable than deflation in most situations. This does not include hyper inflation by the way. Secondly, inflation shows economic growth, or at least it reflects some economic activity. The major positive aspect is that it helps smaller firms grow to larger firms. Assuming that both firms A and B sells similar goods. A is a large cooperation with economies of scales and B a smaller firm without economies of scale. Therefore the prices of goods A would be less than good B. Assuming that the inflation rate is 10%. The price of good A is $9 and inflation causes it to increase to $9.90. And for good B, since the cost of production is higher, it costs $10. And with inflation pushing it up to $11. The proportion of increase is similar, but the real price increase is different, firm A $0.90 and firm B $1. Thus firm B having a $0.10 increased revenue more than firm A. Resulting in a larger benefit, ceteris peribus cost of production does not increase in proportion and other factors equalized.


Would the effect of government spending on unemployment be studied by micro-economists?

Macro Economist because they deal with the bigger issues such as inflation,unemploment as a whole. Microeconomist would deal with how household, and firm make decisions on how they interact in specific market.


Why equity is a call option on a firm's assets?

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What is Relationship between capital structure and value of the firm?

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