Resource Allocation

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What is a market?
where producers (sellers) and consumers (buyers) meet to determine the price of a good or service (bartering)
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What are the 3 methods of price-setting?
Rationing, signalling, incentive
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What determines the prices of goods and services in the product market?
The interaction of supply and demand
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What is the role of rationing?
Allows some people to afford the goods and services, but prevents others
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What is the role of signalling?
Suggests something important about the goods and services to potential buyers - eg. better quality, higher cost of production
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What is the role of incentives?
Acts as an incentive for a supplier to produce the good - eg. for a higher profit
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What is division of labour?
Where workers specialise in one particular task within the production process
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What is specialisation?
Where a country or business focus on the production of a limited range of products or services in order to gain greater efficiency
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Other cards in this set

Card 2

Front

What are the 3 methods of price-setting?

Back

Rationing, signalling, incentive

Card 3

Front

What determines the prices of goods and services in the product market?

Back

Preview of the front of card 3

Card 4

Front

What is the role of rationing?

Back

Preview of the front of card 4

Card 5

Front

What is the role of signalling?

Back

Preview of the front of card 5
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