AP (Advanced Placement) Microeconomics Market Failure & Role of Government-Public Policy to Promote Competition Terms and Persons (Page 2 of 2)

Resource Allocation

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Resource allocation or allocation of resources is a fundamental economic concept that describes how a country uses its limited investable resources/land/among various needs (production of goods/services, creation of infrastructure etc.)

For a developing country, resources may be inadequate to meet its needs. Hence a resource allocation decision should be made in a wise manner by giving priority to important items.

Venture Capital Fund (VCF)

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VCF is an investment fund that manages money from different investors seeking to provide capital in startup and small- and medium-size enterprises that have strong growth potential. According to SEBI, VCF is a fund established in the form of a trust/company including a body corporate and registered with SEBI. The VCF will have dedicated pool of capital, raised in the specified manner and invested by following regulations of SEBI. The objective of the venture capital financing is to invest in high-risk projects with the anticipation of high returns. Following are the main features of VCFs: They finance new and quickly growing business ventures or entities.

VCFs takes higher risks with the expectation of higher rewards while making investment. The VCFs often purchase equity securities of the entities they invest. VCFs help the development of new products or services and acquire technologiesThe VCFs take active participation in the companies they invest and thus helps the growth. The VCF investment is long term in nature in the investing entity. The money provided by VCFs is termed as venture capital. In India, the VCFs are regulated by the SEBI.

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