Assessing the Price Mechanism: Advantages and Disadvantages with Examples.

The video tutorial explains the price mechanism's functions: rationing, signaling, and incentive. It contrasts free markets, where the price mechanism allocates resources, with command economies, where a central authority does so. The tutorial discusses mixed economies like the UK, where the price mechanism is used selectively, citing examples like the NHS, armed forces, and blood donation where it may be unsuitable. The conclusion highlights the advantages and limitations of the price mechanism in resource allocation.

Discuss the implications of incentivizing blood donations with payments.

How does the price mechanism allocate resources according to consumer preferences?

What are the advantages of using the price mechanism in mixed economies?