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Describe the evaluation framework based on economic value creation. Explain the main idea of this framework and its limitations Consider the following example: Suppose the market price for a water bottle made of high tech and (environmental friendly) material is $50. Consumers will only purchase the water bottle if its price is under $70. For a local producer, the cost of producing one water bottle is $25. Calculate economic value, consumer surplus, and producer surplus. Explain why in theory economic value is a better way to evaluate firm performance than evaluation based on accounting profitability or shareholder value. Describe the evaluation framework based on economic value creation. Explain the main idea of this framework and its limitations Consider the following example: Suppose the market price for a water bottle made of high tech and (environmental friendly) material is $50. Consumers will only purchase the water bottle if its price is under $70. For a local producer, the cost of producing one water bottle is $25. Calculate economic value, consumer surplus, and producer surplus. Explain why in theory economic value is a better way to evaluate firm performance than evaluation based on accounting profitability or shareholder value

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