The paper "How Are Resources Allocated in a Classical Market Economy - Hong Kong Market Economy " is a perfect example of a micro and macroeconomic case study. A classical market economy focuses on the allocation of resources on the basis of private ownership and decentralized decision makings. In this regard, the private sector is accorded the intellectual property rights to engage in resource allocation and distribution for reasons of boosting the market economy. The essentiality and the core of the classical market economy constitute a healthy market competition where producers and consumers have the audacity to exchange goods and services freely.
Groups of individuals and private industries take the center stage in making managerial decisions on how products and services can be allocated at a minimal cost. The private sector enjoys the economic advantage of making a decision about consumers and producers, and this modality plays a fundamental role in determining forces of demand and supply in the allocation of resources. A classical market economy uses the systems of prices in a bid to ascertain the potentiality of a market economy to incur losses and make huge profits.
However, this paper discusses how resources are allocated in a classical market economy. On the same note, the paper presents principles and mechanisms in allocating goods and services in Hong Kong. In a classical market economy, resource allocation is consistent with the fundamental principles of a free market policy in which the production and consumption of goods and services are determined by individuals’ decisions and market forces but not the government. In this context, the private sector evaluates what people spend and the humanities’ financial capability to purchase goods and services.
Besides, the fact that private firms and the household sector contribute to the contextualization of a classical market economy plays a crucial role in understanding the nature and features of the market economy. Managing the concern of resource scarcity and unlimited wants comes out as an essential feature of a market economy.
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