Market Systems in Allocating Societal Resources

Topics: Economic system, Resource allocation, Allocation Pages: 4 (1191 words) Published: September 14, 2011
Name: Ying Han
Student Number: 11AL0740
Topic: Market Systems in Allocating Societal Resources
Word count: 1102 (not including the Bibliography)

Market Systems in Allocating Societal Resources
With the development of society, the availability of resources has become limited. Therefore, it is of vital importance to develop an understanding of resource allocation. A free market (a market in which there is no governmental intervention and regulation) (Wikipedia, online) in this sense, plays a key role in allocating resources. In this essay, along with some of the principles of economics, I will analyze the market system and its outcomes, and elaborate on the transformation of the Chinese economic system. Then, I will demonstrate the market system’s benefits and limitations by using the real world example of China’s economic system. The market system consists of three major markets: the product market, the labour market and the capital market. The market system is characterized by a set of interconnecting relations (Dermot McAleese, Economics for Business, 2004), in which price and competition are very important factors. I am going to take China as an example in the following paragraphs. As is known to us, China’s economy has experienced a transformation from planned economy to a combination of planned economy and market economy. So let us have a glimpse of how the different role market plays in these completely different economic systems. In the early 1880s, planned economy dominated China’s economic system. Planned economy assumes that the wisest and fairest allocation of resources is achieved though government planning of what is produced and who gets it at what cost. Most enterprises and corporations are initiated and financed by the government. Most resources of production are owned by the state. (Xiaoliang Wei,GRE reference book,2006) In a word, the societal resources are allocated based on the government’s command and instruction. It is the government...

Bibliography: Akerlof, G., and Kranton, R. (2000) Economics and Identity. The Quarterly Journal of Economics. CXV(3)
McAleese, D. 2004. Economics for Business.3rd ed. Pearson Education Publishing.
Wikipedia, 2011. Article of Free Market. [online] Available at: < market>[Accessed 25 Aug 2011
Xiaoliang Wei. 2004. GRE reference book. 1st ed. Qun Yan Publishing.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Market System Essay
  • Market Economy Compared to Planned Economy in Terms of Allocating Scarce Resources Essay
  • Arguments in Favor of a Free-Market System of Resource Allocation Essay
  • Why Do Some People Believe That the Market System Is the Best Mechanism for Allocating Scarce Resources and Thereby Encouraging a Positive...
  • Economic Systems: Market Economy Essay
  • Examine the Arguments in Favour of a Free Market System of Resource Allocation Essay
  • resource markets Essay
  • Market economy system in Poland Essay

Become a StudyMode Member

Sign Up - It's Free