Economics 1021A/B Chapter Notes - Chapter 5: Demand Curve, Allocative Efficiency, Social Cost

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Emilie Rivers

Document Summary

There are 8 alternative methods of allocating scarce resources: market price. People who are willing and able to pay that price get the resource. 2 kinds of people decide not to pay the market price: those who can afford to pay but choose not to buy, those who are too poor and simply can"t afford to buy. For many goods/services, distinguishing between ^ doesn"t matter. For a few items, it does matter: ex. Poor people can"t afford to pay doctors" fees, which are essential therefore doctor"s fees are usually allocated by one of the other methods: command system. Command system: allocates resources by the order (command) of someone in authority. In canada, the command system is used extensively inside firms and government departments: ex. If you have a job, someone usually tells you what to do. Your labour is allocated to specific tasks by a command.