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    The Role of Market in Allocating of Resources

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    The document discusses the role of markets in allocating resources. It defines key economic terms like planned economic system, mixed economic system, and market economic system. It also explains how the price mechanism allows markets to allocate resources to produce goods that consumers want.

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    The Role of Market in Allocating of Resources

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    7a4374 his
    144 views3 pages
    The document discusses the role of markets in allocating resources. It defines key economic terms like planned economic system, mixed economic system, and market economic system. It also explains how the price mechanism allows markets to allocate resources to produce goods that consumers want.

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    6.-The-role-of-market-in-allocating-of-resources

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    The document discusses the role of markets in allocating resources. It defines key economic terms like planned economic system, mixed economic system, and market economic system. It also explains how the price mechanism allows markets to allocate resources to produce goods that consumers want.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    144 views3 pages

    The Role of Market in Allocating of Resources

    Uploaded by

    7a4374 his
    The document discusses the role of markets in allocating resources. It defines key economic terms like planned economic system, mixed economic system, and market economic system. It also explains how the price mechanism allows markets to allocate resources to produce goods that consumers want.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Knockout .Economics-No.

    1 Economics and Business Studies Tutors


    www.knockouteconomics.com
    Private class, Small Course, Online course :@Knockout.economics

    CHAPTER 6 : THE ROLE OF MARKET IN ALLOCATING OF


    RESOURCES
    Key terms
    1. Economic system : the organisations that influence economic behaviour and
    determine how resources are allocated
    2. Planned economic system : an economic system where the government makes
    the crucial decisions, land and capital are state-owned and resources are
    allocated by the government
    3. Mixed economic system : an economy in which both private and public sectors
    allocate resources together
    4. Market economic system : an economic system where consumers determine
    what is produced, resources are allocated by the price mechanism and land and
    capital are privately owned
    5. Price mechanism : the way the decisions made by households and firms
    interact to decide the allocation of resources
    6. Capital - intensive : the use of high proportion of capital relative to labour
    7. Labour - intensive : the use of high proportion of labour relative to capital
    8. Demand : The willingness and ability to buy a product
    9. Supply : the willingness and ability to sell a product
    10. Market equilibrium : a situation where demand and supply are equal at the
    current price
    11. Market disequilibrium : a situation where demand and supply are not equal at
    the current price

    No part of this resource may be reproduced, distributed, or transmitted in any form by any means for non-personal use
    without the prior written permission from Knockout.Economics
    Knockout .Economics-No.1 Economics and Business Studies Tutors
    www.knockouteconomics.com
    Private class, Small Course, Online course :@Knockout.economics
    1. The three key allocation decisions

    Functions of economic system is to answer fundamental economic 3 questions.


    ⇒ what to produce?
    ⇒ How to produce?
    ⇒ For whom? / Who is to receive the product?

    2. Different economic systems

    Economic systems Definition Example

    1.Planned economic ⇒ The state or government makes E.g. North


    system / command / decisions about what to produce, how to Korea
    collectivist economy produce it, and who receives it.

    2.Market economic ⇒ Buyers or consumers determine what is E.g. USA,


    system produced. They signal what they want to Australia
    sellers through the price mechanism.

    3.Mixed economic ⇒ Both private sector and public sector E.g. Thailand
    system (government) allocate resources together

    No part of this resource may be reproduced, distributed, or transmitted in any form by any means for non-personal use
    without the prior written permission from Knockout.Economics
    Knockout .Economics-No.1 Economics and Business Studies Tutors
    www.knockouteconomics.com
    Private class, Small Course, Online course :@Knockout.economics

    3. The role of price mechanism


    : Resources are allocated to produce products which consumers want.

    No part of this resource may be reproduced, distributed, or transmitted in any form by any means for non-personal use
    without the prior written permission from Knockout.Economics

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