They include free markets, mixed economy and command economy markets. Markets play a vital role in the allocation of resources in society. Operations in this kind of Market systems in allocating societal resources respond to the price mechanism in the market.
The other common type of market is centrally planned economy system where the government is responsible for the allocation of societal resources. Owners of factors of production usually aim at maximizing their rents, wages, interests and profits. Under this system, when the government fails to meet the desires of the society, private sector takes control hence there is economic balance in the country.
The government may place a limit on what can be sold or bought. From a free market, mixed economy market is considered as the second most efficient system as far as allocation of societal resources is concerned. The government upholds the rights of individuals to own property through legal systems.
The private sector is encouraged to participate in the utilization of resources and help to gain profits for the whole country Anderson, p.
The government has a role of allocating resources that are termed as public goods.
However, markets operate through market exchange where the transfer of the ownership of a piece of property either a good or service to a certain party at an agreed price occurs. Some resources in this economy are owned by the government while others owned by the private sector.
In a free market economy, almost all factors of production are owned by organizations if not private individuals. It ensures that both the government and private sector have a say in the allocation of resource.
The role of government in a free market economy is to supply the public goods, provide legal frameworks which markets operate, maintaining a sound currency and prevention of monopolies in the market.
The government has no direct role in the allocation of resources in a free market economy. There are three types of markets in the world which have different operations. The main actors in this market are the consumers, the producers, the owners of private properties and the government.
The consumers aim at maximizing their individual utility or welfare while producers aim at maximizing gains in terms of profits Tucker, The key players in this type of market include the government, sellers and buyers.
Market determines what commodities are produced, how they are produced and the targeted consumers of the products Tomasi,p. In this market mechanism, producers as well as owners of factors of production have the right to sell what they own following the market mechanism.
The basic economic problems are resolved by the forces of the markets. Planning of all economic activities is done by the government, and the private sector is not involved in any economical accumulation. The consumers and proucers are motivated by self interests since their decision are based on private gains.
The market determines the prices at which services or commodities are exchanged as well as the quantity that will be sold or bought. In a free market economy, the resources are allocated from the spending decisions of consumers and producers.
A mixed economy is characterized by both market operations and government interventions. The free market economy is seen to have the best way of allocating resources in society.
As the world is becoming globalized, many countries are adapting mixed economy systems. The market consists of buyers who are willing to purchase a service or a commodity and suppliers who are willing to sell their services or products at a given price.
The mixed economy also plays a vital role in allocating resources in the society. Whenever there is a market failure, the government has a right to intervene and correct these measures Anderson, p.
Controlled market is not a fair way of allocating societal resources since it is dominated by the government. Most people equate this system to socialism which is now passed by time.
Here, resource allocation occurs out of market mechanism. The main reason is that this type of market splits all thee available economic resources between the government and the private sector. From the three market economies discussed above, mixed economy is the best as far as allocation of societal resources is concerned.
Many people are puzzled on how markets can be used to allocate the resources in society. Under this market system, it does not mean that the market forces are not there, market forces are present but are closely observed by the government so as to eliminate any form of oppression to the consumers.
They include major resources, for instance those used in education, health care and scientific research. On the contrary, the government aims at maximizing the social welfare as it is motivated by the considerations of the goods of society and not self interest.Market System, Brute Force, Queuing, Random Selection, Tradition, Equal Shares, Need, Planned Systems.
MARKET SYSTEM is the system used by the U.S.A. to distribute the allocate scarce resources by letting the buyers and sellers choose what to put in the market. Market Systems in Allocating Societal Resources With the development of society, the availability of resources has become limited.
Therefore, it is of vital importance to develop an understanding of resource allocation. Market Systems in Allocating Societal Resources Topic: Market Systems in Allocating Societal Resources Word count: (not including the Bibliography) Market Systems in Allocating Societal Resources With the development of society, the availability of resources has become limited.
Economic Systems. How goods and services are supplied to buyers or consumers, and how the resources and production of these goods are organized. An economic system in which the allocation of resources is heavily controlled by government instead of free market forces. Market System.
-concerns about those who can't compete in the free. How are resources allocated in a market economy? How are resources used in a market economy? Update Cancel. I argue demand and supply would be at the top of the list when we talk about resources allocation then price system can be adjusted.
The demands and supply control the balance factor, here! without demand and supply price almost. Allocation of resources, apportionment of productive assets among different uses.
Resource allocation arises as an issue because the resources of a society are in limited supply, whereas human wants are usually unlimited, and because any given resource can have many alternative uses.Download