Resource Allocation and Economic System

Property Rights in a Market System

Legal rules that protect what people own.

Purpose of Property Rights

To give people the right to use, sell, or invest their property.

Effects of Strong Property Rights

Encourage people to work, invest, and build businesses.

Strong Market System

Dependent on strong property rights.

Consequences of Broken Property Rights

If property rights break down, the market system also breaks down.

Price Signals

Price changes that guide buyers and sellers in the market.

Function of Price Signals

Tell buyers what to buy or not buy, and sellers what to make or stop making.

Role of Price Signals in Decision Making

Help people make smart choices with money and keep the economy balanced.

Key Questions Addressed by Price Signals

What to produce, how to produce, and for whom to produce.

Power of Property Rights

Give people the power to act in the market.

Information Provided by Price Signals

Gives people the information to act in the market.

Interdependence of Property Rights and Price Signals

Together, they make markets work effectively.

Impact of Lacking Property Rights

No one responds to price signals, leading to confusion over ownership.

Economic Questions in Market Systems

What should be produced?, How should it be produced?, Who should get the goods produced?