• How do individuals allocate scarce resources? (How do people make choices?)
• How do markets allocate scarce resources?
• Is market allocation desirable?
1.
Individuals allocate scarce resources on the basis of equi-marginal principle and make their choices. Here, each individual identifies marginal utility of the each product and service divided by the price. It gives marginal utility per dollar of that product. Now, any product or service, that gives highest level of marginal utility per dollar, will be purchased & consumed by using the resource. Now, the next highest level of marginal utility per dollar of the product will be identified and consumed. It will help maximize the utility while using the scarce resources. It gives highest level of satisfaction and utility by using resources.
2.
Market allocate resources on the basis marginal productivity of the factors of production divided by the price of the factors of production. Now, a combination is selected, where MPL per dollar becomes equal to the MPK per dollar spent. It helps to achieve efficient utilization of resources.
3.
Market Allocation is desirable,
because it increases the efficiency and benefits to the parties
involved. But, the market should be competitive to achieve the
efficiency. If it is monopolized, then market allocation will not
be efficient.
• How do individuals allocate scarce resources? (How do people make choices?) • How do markets...
The study of decision-making of how to allocate scarce resources at the national level Question 2 2 pts Which of the following inferences can NOT be made from the macroeconomic principles? A country that decides to allow trade with other countries will likely see productivity rise If the incomes of people are generally rising then their quality of life is likely rising as well The government can sometimes improve the results of a market economy In the short run, a...
1A contest is a good way to allocate scarce resources when A) The efforts of the players are hard to monitor directly B) The lines of responsibility are clear C) The decision being made affects a large number of people D) There is no effective way to distinguish among potential users 2 American Idol is a popular television program where contestants compete to win a $1 million record deal. To determine the winner, fans either dial the number or send...
In this chapter you learned that one function of price is to help allocate scarce resources. The inevitable result is that the prices charged for some goods and services are greater than some buyers are willing, or able, to pay. How would you respond to a customer who maintains that he would very much like to buy your product or service but that it is simply “too expensive”? Why do you think the challenge of explaining pricing is so difficult...
Economics is a social science concerned with: The best use of scarce resources to achieve the maximum satisfaction of economic wants. Increasing the level of productive resources so there is a minimum level of income. Increasing the level of productive resources so there is maximum output in society. The best use of scarce resources paid for at the minimum level of cost to consumers and businesses. Answer: A person should consume more of something when its marginal: benefit exceeds...
Practice exercises 1. (1 point) Which one of the following statements best describes economics: Economics studies how individuals, institutions, and society a. use unlimited resources to satisfy unlimited wants. b. use scarce resources to satisfy scarce wants. c. use limited resources to satisfy limited wants. d. make choices in the face of scarce resources that have alternative uses. 2. (1 point) Fill in the blank -deals with firms and individuals, while focuses on highly aggregated markets for the entire economy....
When people make financial choices such as the decision to borrow money, many people do not think about the interest rate itself. For some, the question is merely whether or not the loan payment is affordable. If the payment is affordable and the interest is high, what is the third variable that many individuals frequently overlook? Is this something you have done?
Explain the role of prices in allocating scarce resources in a market economy. Discuss the view that that the use of maximum and minimum price controls only serve to distort markets and bring about a misallocation of resources.
6) How do most modern societies allocate resources?
1) Markets are efficient because people make choices. a) individual b) irrational c) rational d) good Submit
Allocation of resources if efficient when O people are conserving resources in order to save them for future generations. o the fruits of production are distributed equally among the members of society. o all members of society are satisfied with the distribution of goods and services. O people are getting the maximum benefit from the scarce resources they have.