LS 6 - CHAPTER 5 Efficiency and Equity Resource Allocation...

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Efficiency and Equity CHAPTER 5 Resource Allocation Methods Scare resources might be allocated by using any or some combination of the following methods : Market price Command Majority rule Contest First-come, first-served Sharing equally Lottery Personal characteristics Force How does each method work? Resource Allocation Methods Market Price When a market allocates a scarce resource, the people who get the resource are those who are willing to pay the market price. Most of the scarce resources that you supply get allocated by market price. You sell your labor services in a market, and you buy most of what you consume in markets. For most goods and services, the market turns out to do a good job.
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