Market Economy

Market Economy

In a market economy if there is a good that is scarce it may require rationing otherwise price is used to ration goods (Gwartney, Stroup, Sobel, & Macphearson, 2013). This method of using price to ration goods influences individuals to engage in activities that increase their ability to pay for goods and services (Gwartney. et al, 2013). These activities encourage the production of goods and services supplied to others in order to generate income (Gwartney. et al, 2013).

Grades are rationed based on the students’ performance on discussion boards, assignments, and exams. This rationing, hopefully, influences students to study hard, turn in quality assignments by the due date, and keep up on the reading for the class. If the highest grades in the class were rationed to the teacher’s favorite students it would decrease the amount of quality work and increase students desire to win the favor of their teacher over their desire to learn (Gwartney. et al, 2013).

Marginal analysis is the process of identifying the benefits and costs of different alternatives by examining the effect on total revenue and total cost (Gwartney. et al, 2013). Shawn has already paid for the buffet therefore there would be no difference in cost. If he was still hungry he would increase the benefits by filling his stomach.

Having private ownership rights means that the individual has the right the right to use the property however they wish, their property is legally protected from other individuals that might wish to invade or damage the property, and they have the right to sell the property (Gwartney. et al, 2013). As long as private owners do not use their rights to infringe upon someone else they may do anything that they want with their property (Gwartney. et al, 2013). Simply put, one owner cannot use their property to damage the property of someone else. Private ownership influences the incentives for individuals to take care of things they own because if...