Economics 1021A/B Chapter Notes -Demand Curve, Marginal Utility, Marginal Cost

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Michael Parkin

Document Summary

When a market price allocates a scarce resource, the people who are willing and able to pay that price get the resource. Two kinds of people decide no to pay the market price: those who can afford to pay but choose no to buy, and those who are too poor and simply cant afford to buy. A command system allocates resources by the order (command) of someone in authority. A command system works well in organizations in which the lines of authority and responsibility are clear and it is easy to monitor the activities being preformed. But a command system works badly when the range of activities to be monitored is large and when it is easy for people to fool those in authority. Majority rules allocated resources in the way that a majority of voters choose. Societies use majority rule to elect representative governments that make some of the biggest decisions.