Economics 1021A/B Lecture 9: Efficiency and Equity
15 Oct 2015
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Resource allocation method: resources are scarce, therefore must be allocated efficiently and fairly. Resources allocated to people who are able and willing to pay at the market price. People that don"t buy: can afford but won"t buy, too poor poor people that can"t buy essential resources (healthcare, education), may get it through other methods, command: Command system: allocate resources by order of someone of authority. Ex. in canada: used in firms/ government. In organizations where authority and responsibility is clear. Activities too large, people in authority can be fooled. North korea: majority rule: resources allocated by majority. Good when: making big decisions, decision affect large number of people and self-interest must be suppressed to use resources most effectively, ex. Ex. sport competition or first company to provide the world with internet. (winner gets the biggest prize or profit) Efforts of players are hard to monitor. Only a few people end up with the prize: first come, first serve:
