Markets Are Usually a Good Way to Organize Economic Activity
description
Market economy: Economy allocates resources through the decentralized decisions of firms and households (everyone holds the power to alter the economy) as they interact in the market for goods and services
Households decide what to buy, who to work for
Firms decide who to hire, what to produce
Economy in Vietnam
Socialist-oriented market economy (current): supply and demand determined by price (market economy with a socialist view)
Before 1986, no market = bao cap = what to produce is determined by central command econ, gov order
Households and firms look at prices β decide what to buy and sell β guide them to reach outcomes that maximize the welfare of them or of society as a whole