ECON 1050 Chapter 5: Economics-1 (1) (dragged)
17 Sep 2016
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Scarce resources might be allocated by: market price, command, majority rule, contest. How does each market work? first-come, first-served lottery force. When a market allocates a scarce resource, the people who get the resource are those who are willing to pay the market price. Most of the scarce resources that you supply get allocated by market price. You sell your labor services in a market, and you buy most of what you consume in markets. For most goods and services, the market turns out to do a good job. Command system allocates resources by the order (command) of someone in authority. For example, if you have a job, most likely someone tells you what to do. Your labor time is allocated to specific tasks by command. A command system works well in organizations with clear lines of authority but badly n an entire economy. Majority rule allocates resources in the way the majority of voters choose.
