Outline the Nature of the Economic Problem. Examine the Ways a Mixed Market Economy Addresses the Issues of the Allocation of Recourses and the Distribution of Goods and Services.

Topics: Economics, Economies, Economic system Pages: 3 (723 words) Published: February 25, 2013
Eco essay: Outline the nature of the economic problem. Examine the ways a mixed market economy addresses the issues of the allocation of recourses and the distribution of goods and services.

Every individual and economy in the world faces the economic problem. The economic problem is there are finite recourses and infinite wants. The mixed market economy like every other economy attempts to solve this problem. Unlike every type of market economy the mixed market economy uses strategic government intervention and consumer sovereignty to sole the problem. The mixed market economy is the most common type of economy used around the world.

The economic problem is a problem all around the world that every individual faces. The problem is there are unlimited wants and limited recourses. This theory can be showed by opportunity cost in a PPF. PPF--------------------------------------------------------------------------------------------PPF As you can see in the PPF above the opportunity cost of … capitol is … labour. This explains how there are limited recourses. Therefore we can see that the economic problem is the problem of unlimited wants and limited recourses.

The mixed market economy is an extremely common economy used around the world. This economy uses consumer sovereignty, the price mechanism and strategic government intervention to control the economy. The mixed market economy makes choices on allocation of recourses and how to distribute recourses. These two categories and be split into 4 processes, which are: What to produce, how much to produce, how to produce and how to distribute production.

What to produce is decided by different choices within the economy. These choices are based on consumer sovereignty, price mechanism and government intervention. Consumer sovereignty is the spending patters of consumers. When private companies see these patters they allocate their recourses accordingly. The price mechanism is supple V demand. This decides...
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