Allocation Flashcards
What is a command/planned market
the govt controls the market and makes decisions
what is one benefit and one con of command market
no market failure
no variation
What is a mixed market economy
Combines both government control and price fluctuations between producers and consumers
what is a market economy
decisions making is decided by price fluctuations between producers and consumers
one pro and one con of market economy
freedom and competition
lack of price stability
what is allocative effienceny
when resources are allocated to the best interests of society
What does allocative efficiency try to achieve
maximise utility and social welfare
what is productive efficiency
resources are used to give maximum possible output at the lowest cost
What are incentives
factors which motivate economic decisions made my individuals, firms and govt
what are three types of incentives
price
income
tax
What does the PPC show
max possible output an economy can achieve when all resources are fully and efficiently used
