ECON 1000 Lecture Notes - Lecture 7: Market Price, Marginal Utility, Marginal Cost
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Market price: let the market regulate itself. Contest: the winner of a contest gets first choice. First come, first served: getting what is available. Sharing equally: divide up the resources equally. Personal characteristics: certain groups of people get certain resources. When a market allocates a scare resource, the people who get the resource are those who are willing to pay the market price. Most of the scare resources that you supply get allocated by the market price. How much you produce and how much you work depends on how much money you make for it. You sell your labour services in a market, and you buy most of what you consume in markets. How much work you do and how much you buy depends on how much you make. For most goods, the market does a fairly good job of this.