2.1 Explain How Economic Systems Attempt To Allocate Resources Effectively

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2.1 Explain how economic systems attempt to allocate resources effectively. An economy is the way which a nation makes economic choices about how the nation will use its resources to produce and distribute goods and services and there are three main economic systems including command, market and mixed economy.
 Command Economy: In a command economy, most resources are owned by the state and allocated by government plans and commands, people have to follow government plans and commands in production and consumption. One of the advantage of this economy is that resources are quickly and effectively mobilized on a large scale which reaches equality for people in the state but the need of the society are often neglected by the government as the …show more content…
It can allocate goods where consumers are needed by measuring demand and supply in the market but the government has not enough regulation and taxpayer-funded bailout of business which is too much risk on them and when there is government intervening, there is a black market as unethical business man wants to make more profit by selling higher price of product in the market. HSBC under mixed economy can allocate their goods and service by market price and price system to provide financial service for customer but it also needs to follow the common law and pay taxes following the tax system guided by the government. Another example is Hong Kong, as it has been described as a typical example of a mixed economy, this is because Hong Kong has a free market system with minimal government intervention. However, many industries in Hong Kong are not really free from the influence of the government, apart from public housing,12-year free education and subsidized medical services , it also intervenes in many industries like public utilities as the government has invested in Cyberport and recently expanding project in Hong Kong
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