Study Economics notes on Resource Allocation for A-Level. Useful for revision, homework, and exam preparation in Zimbabwe.
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This is the A-Level Economics notes. It is a free notes for revision.
Discuss thether resources are efficiently allocated in a market economy thin in a commancleconomy (12) market economy is an economic. system in Which the facturs of production are owned and controlled by private individuals. Command economy is sensidered identified as an economic system in which factors of production are owned and controlled by the state. Resources are efficiently allocated in a market economy than in a command economy duetonumber of fattributes such as consumer sovereignty, tess or no gooenment inferference, among others, however the assetion can be quite debatable due to the fact that in a market economy, there is problem of market failure. As a pariminary step, in a market economy, resource are allocated according to price mechanism. Efficient allocation of resoures can be achieved when prices aet as a signal to both consumers and prodwers in resources allocation. The price decide what and how much to produce, how to produce and for whom to produce. On the case of what to produce, consumers express their valuation of a good through prices: When There is increase in demand for a good there will be an increase in the price of the good. Producers Then allocate more resources to the production of the good then to the alternate good with lower using Scanned by CamScanner