Question

In a market economy, price allocates. The price of a product allocates the production of that product to those companies that can most efficiently produce that product. The price of a product also allocates the distribution of that product to those most willing and able to pay for that product.

The United States functions primarily as a market economy. Provide an example of a time when the market allocated a product away from you. Explain. Provide an example of a time when the market allocated a product to you. Explain. Provide an example of a time when the market allocated the production of a product away from a particular company. Explain

Answer 1

What product/s get allocated to me or away from me is determined by the interaction of my budget line and indifference curve. In other words, my ability and willingness to pay.

For instance, I am not big on the fancy coffee places and am happy with the $2 coffee, so the fancy coffee gets allocated away from me and the cheaper one gets allocated to me.

The production of a specific good gets allocated to a country (or company) if customers vote for their product with their money, else it gets allocated away from them. The example of Japanese automobile is pertinent here. Production of cars got allocated away from American auto companies in favor of Toyota over the past half century or so.