Using Economic Studies for Policy Purposes
Year: 2003
Type: book-chapter
Abstract: Economics is the study of how to best allocate limited resources. Economics assumes that resources are inherently limited, and decision makers must choose how to employ these resources between alternative uses. Ever since Adam Smith described an economic market as an “invisible hand,” which automatically allocates resources efficiently, economists have believed that competitive markets—with their inherent rules of supply and demand—should help guide resource allocation. Market incentives drive the quantity, price, and allocation of goods and services, and if the market meets certain competitive conditions, it will allow people who most value particular goods and services to obtain them at fair prices. These incentives ensure that producers create high-quality goods and services efficiently—at the lowest possible prices for a given quality product. Goods and services continue to be traded as long as trades make all parties better off. This exchange of resources would continue until no one could be made better off without making someone else worse off—an efficient outcome by economic standards.
Source: Humana Press eBooks
Authors: Rajiv Shah, Kevin G. M. Volpp
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W88353311