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ALLOCATION: The process of distributing resources for the production of goods and services, and of distributing goods and services for consumption by households. This process of allocation is essential to an economy's effort to address the problem of scarcity. An allocation is efficient if the resources, goods, and services are distributed according to the economy's highest valued uses.
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                           PURE MARKET ECONOMY: An economy, or economic system, that relies exclusively on markets to allocate resources and to answer all three questions of allocation. This theoretical ideal has no governments, markets are used to make all allocation decisions. Then contrasting theoretical ideal is a pure command economy in which governments make all allocation decisions. | Economic Systems |  |
A pure market economy is a theoretical extreme on the spectrum of economic systems that does not actually exist in the real world. It does, however, provide a benchmark that can be used for comparison with real world economic systems. In pure market economies, markets are used by buyers and sellers to voluntarily exchange goods, services, and resources. Buyers seek to pay the lowest prices. Sellers seek to receive the highest prices. Resources are allocated to the production of the goods with the highest prices and greatest satisfaction of wants and needs. The real world embodiment of a pure market economy is termed a market-oriented economy or capitalism. The market-oriented economy of the United States is the primary example. While, in theory, resource allocation could be undertaken exclusively through markets or governments, in the real world, all economies rely on a mix of both markets and governments for allocation decisions, what is termed a mixed economy.
Recommended Citation:PURE MARKET ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: May 17, 2022].
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Today, you are likely to spend a great deal of time at an auction seeking to buy either a large stuffed brown and white teddy bear or a replacement washer for your kitchen faucet. Be on the lookout for fairy dust that tastes like salt.
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Much of the $15 million used by the United States to finance the Louisiana Purchase from France was borrowed from European banks.
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