Business Environment & Economic Systems, Fiscal & Monetary Policies, Cc & Regulatory Bodies, International Trade & British Economy, Global Factors & Impact on British Organisations, Analysis & Implications Joining Eu
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a) Explain how different economic systems attempt to allocate scarce resources. Outline the economic system of the UK.
The allocation of resources is an economic theory concerned with the discovery of how nations, companies or individuals distribute economic resources or inputs in the economic marketplace. Traditional business inputs are land, labour and capital.
There are three major systems that can be distinguished in many parts of the world economy within these basic models there will be a range of variations and differences.
Planned (Command) Economy
An economy where supply and price are regulated by the government rather than market forces. Government planners decide which goods and services are produced and how they are…show more content… • Democracy and Freedom
• Wasting resources through duplication of goods and services
• Inflation and unemployment are more likely
• Aggressive competition strategy can result in powerful producers wiping out local competition and local jobs. They are then able to exploit the market.
• Firms control prices and therefore resources are not used in the most efficient way
• Possibility of large inequalities amongst consumers resulting in certain goods and services only available to those who can pay
• Profit maximisation might be achieved through lack of concern for society and the global environment
A Mixed economy employs features of both government/planned economy and a free market enterprise, where some important production is undertaken by the state, directly or through its nationalised industries and some is left for private enterprise. It is a type of economy in which private and public sectors co-exist and try to retain the advantages of capitalism and socialism while trying to eliminate the downsides of both the systems. The allocation of resources is created through the self-interest, competition and supply and demand of individuals and companies in the economic marketplace. Individuals and companies distribute resources through self-regulation by using only the inputs they need and selling or giving away their leftover
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