Sept.30 Efficiency and Equity
Second mid-term: Chapter 5-8
Different economics systems follow different methods.
Scare resources might be allocated by:
1. Market prices
Be used in most systems, especially in macroeconomics.
3. Majority rule
We simply vote... And the government decides what to follow,considering the
results of voting.
People compete, and the winner gets the prize.
The first person who approaches the resources gets it.
Eg. Movie tickets, bus seats, the ATM machine, the highway
6. Sharing equality
Pass and law to stress that those resources need to be allocated equally. 7. Lottery
8. Personal characteristics
We use personal characteristics to make decisions. Eg. marriage
It could be used positively and negatively. It can be misused sometimes.
Negatively use of forces to allocate resources: some nations have strong military
power and they deprive the resources from other weak nations.
Positively use of forces to allocate resources
Demand,willingness to pay and value
What you pay to consume another unit of goods is the willingness(marginal
benefit). So the demand curve is also a willingness