The allocation of resources (OCR A-Level Economics): Flashcards

Factors that motivate/influence human behaviour & decision-making

Resources allocated via decentralized decisions of firms/households

Gov't makes all decisions on production & distribution of goods

Combines market & planned economy elements; private & public sectors

Financial (monetary rewards/penalties) & non-financial (moral/social)

Private ownership of resources and businesses

Prices act as signals for resource allocation

Resources owned & controlled by government

Meeting societal needs rather than profit

Both private & public sectors coexist

Goods/services produced at lowest possible cost

At minimum point on average cost curve

Resources distributed to maximize total benefit to society

$P = MC$ (price equals marginal cost)

Resources used to maximize total benefit to society