Explain how resources are allocated in reference to the different economic systems?
Title: Explain how resources are allocated in reference to the different economic systems?
Category: /Science & Technology/Biology
Details: Words: 1695 | Pages: 6 (approximately 235 words/page)
Explain how resources are allocated in reference to the different economic systems?
Category: /Science & Technology/Biology
Details: Words: 1695 | Pages: 6 (approximately 235 words/page)
An economic system is the result of individuals (consumers and producers), groups (firms, trade unions, political parties, families etc) and the government coming together and interacting in a legal and social society. The function of an economic system is to resolve the basic economic problem - scarcity which means that the resources are limited but wants are infinite. This distribution has three dimensions:
* What is to be produced
* How is it to be produced
* For
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is dictated by demand, the bigger the demand the bigger the supply and thus the price of the product is given. In a planned economy the governing body makes those decisions, supply is dictated by a governing body which tries to predict demand however this proves very difficult and it supplies goods to its wish and in a mixed economy supply of certain guds is dictated by a governing body and the others by demand.