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The price mechanism theory is not an effective tool of allocating resources in less developed countries. discuss?
Wiki User
∙ 9y ago
The price mechanism is based on the economical principles of supply and demand. It does not work with underdeveloped nations because poverty can interfere with basic supplies that people want and need. Therefore, it does not accurately allow the market to determine necessities since poor people may not be able to buy what they need.
Wiki User
∙ 9y ago
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Describe four advantages of using price as an allocating mechanism?
Advantages of using price as an allocating mechanism are that it's a basic system and is already well-known. Other advantages are that it's easy to understand and the principles are universal in nature.
Efficiency of price mechanism in allocating resources?
Why the price mechanism is not always efficient at delivering public goods, merit goods and de-merit goods
What is an advantage of using the market mechanism to allocate resources between alternative uses?
An advantage of the market mechanism over government intervention as a method of allocating resources is efficiency. The forces of demand and supply create automatic economic order.
Discuss whether the price mechanism is an effective way to solve the basic economic problem?
Price mechanism is an effective way to solve the basic economic problem. The price of a product is what will determine the demand and this will influence the production output which directly affects the economy.
Is the price mechanism an effective way to the solve the basic economic problem?
The price mechanism is a feature of the free market and operates through demand and supply and the self interest of individuals, government action is minimised. This has the benefits of incentive, efficiency, innovation, choice and consumer sovereignty. Against this there may be market failure including inequality, lack of public and merit goods, externalities and instability. Depending upon the degree of failure the mechanism may be more or less effective. The price mechanism does not solve the basic economic problem but is thought to be effective when operating efficiently.
What are four advantages of using price as an allocating mechanism?
The advantages of using price as an allocating mechanism include that it is a simple system and it is already known. Two other advantages are that it is easy to understand and it is universal.
Describe four advantages of using price as an allocating mechanism?
Advantages of using price as an allocating mechanism are that it's a basic system and is already well-known. Other advantages are that it's easy to understand and the principles are universal in nature.
Efficiency of price mechanism in allocating resources?
Why the price mechanism is not always efficient at delivering public goods, merit goods and de-merit goods
What is an advantage of using the market mechanism to allocate resources between alternative uses?
An advantage of the market mechanism over government intervention as a method of allocating resources is efficiency. The forces of demand and supply create automatic economic order.
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Discuss whether the price mechanism is an effective way to solve the basic economic problem?
Price mechanism is an effective way to solve the basic economic problem. The price of a product is what will determine the demand and this will influence the production output which directly affects the economy.
Is the price mechanism an effective way to the solve the basic economic problem?
The price mechanism is a feature of the free market and operates through demand and supply and the self interest of individuals, government action is minimised. This has the benefits of incentive, efficiency, innovation, choice and consumer sovereignty. Against this there may be market failure including inequality, lack of public and merit goods, externalities and instability. Depending upon the degree of failure the mechanism may be more or less effective. The price mechanism does not solve the basic economic problem but is thought to be effective when operating efficiently.
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