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Wednesday, July 24, 2013

PPT On Rationing Systems

Rationing Systems Presentation
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Rationing Systems Presentation Transcript: 
1.Rationing Systems

2.Meaning
Rationing Systems is just a fancy name for the process through which people go through to produce goods and services. It is governed by the basic economic questions. There are 3 basic economic questions any producer must ask before production.
WHAT should be produced and in WHAT quantities?
HOW should they be produced? (what combination of factors of production)
WHO is the goods produced for? (price levels, who is able to afford it, how the price allocates goods in a "fair" way.

3.What to produce?
In planned economy, free and mixed economy?
All businesses must decide what to produce given limited resources
A business must decide how much of each goods or services to produce.
The answer to this question gets complicated with increase in size of business.

4.How to produce?
It is important to have a clear understanding of all your alternatives.
Self or contract production.
Domestic or foreign production
Capital intensive or labour intensive

5.For WHO to produce?
Who is your target consumers?
Will they be able to afford the price?
Are there enough consumer base to support your business?
Differs in each economy and from business to business.

6.Types
Free Market Economy
Centrally Planned Economies.
Mixed Economics
Barter Economy
Command/government economy

7.Rationing Systems are either known as a Free Market Economy or a Centrally Planned Economies. Markets with features of both economies are classified by the collective term of Mixed Economics. In each form of market consumers, producers and/or the government decides the answers to the basic economic questions.

8.Free Market Economy
In a Free Market Economy all decisions are made by the private sector or consumers. Demand and supply is used to set wages, prices and determine what goods and services are produced and for whom. There are normally few cases of surpluses and shortages as it is in the best interest of firms to provide what consumers demand.

9.Disadvantages
Demerit goods
Under-provision of merit goods
Resources may be used up to quickly
Some members of society will fail
Firm dominance

10.Centrally planned economics
Centrally planned economics are economies for which the basic economic questions are answered by the government, they arrange prices, sets wages and arranges for the production of different types of goods and services. The economy and factors of production are collectively owned by everyone. There is supposed to be a more equal distribution of wealth.
 

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