ECON 1000 Chapter Notes - Chapter 5: Smoke Detector, Allocative Efficiency, Deadweight Loss

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Steven Edwards

Document Summary

If resources were abundant not scarce, we would not need to allocate them among alternative uses. In the canadian economy, the command system is extensively used inside firms and government departments. For example: if you have a job, most likely someone tells you what to do. Your labour is allocated to specific tasks by a command. Societies use majority rule to elect representative governments that make some of the biggest decisions. For example, majority rule decides the tax rates that end up allocating scarce resources between private use and public use. And majority rule decides how tax dollars are allocated among competing uses such as education and healthcare. Majority rule works well when the decisions being made affect large numbers of people and self-interest must be suppressed to use resources most effectively: contest: allocates resources to a winner (or a group of winners). They use first-come, first-served to allocate their scarce tables.