Economics 1021A/B Chapter Notes - Chapter 5: Lottery, Competitive Equilibrium, Social Cost

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Jeannie Gillmore

Document Summary

Command: someone in authority orders the allocation of resources: used extensively inside firms and government departments (authority is the line of command, makes it easy to monitor activities and separate responsibilities, but only to a certain extent. Majority rule: allocates resource in the way that a majority of voters choose: works well when the decision is being made affect many people and self-interest is suppressed for effectively. Lottery: resource is allocated to those who comes up lucky in a gaming (gambling) system: works well when there is no effective way to distinguish among potential users of a scarce resource. Personal characteristics: resource is allocated on the basis of personal characteristics. Force: resource is allocated forcefully by those in power, even without the consent of the owners. Ill use: war, organized crimes: beneficial use: transferring wealth from rich to poor, necessary power of law in general.