Respuesta :
A firm is characterised as being efficient if its Intrinsic value is well above market value and if it has many closely-held projects and a high level of opacity
Efficiency can be described as when a firm produces and distributes its goods and services optimally.
Types of efficiency:
- Allocative efficiency : This is when a firm's marginal cost of production equals its price.
- Productive efficiency : This is when a firm produces at the lowest point of its short run average total cost curve.
- Technical efficiency : This is the degree by which a firm maximises output and minimises input.
When the intrinsic value of a firm is above the market value of a firm, it means that the firm is undervalued. This means that the firm is delivering more value to its customers than the amount predicted in the market. This means that the firm is efficient.
Also, if a firm has many closely-held projects, it means that the firm has diversified its source of earnings. This would ensure that the firm is continually able to delver value to its investors and customers. This is a sign of firm efficiency.
A high level of opacity measures the degree of transparency in the firm. One of the benefits of a firm with a high level of opacity is that it would be able to raise capital at a lower cost as investors are likely to demand a lower rate of return. Also, investors are more likely to invest in a firm that is transparent. A high level of opacity is a sign of efficiency.
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