Provide an example of each allocation method that illustrates when it works well

Question

What will be an ideal response?

Answer 1

Below are examples of when each allocation scheme works well:
• Market price: Generally works well in competitive markets and for most goods and services. An example is the allocation of cat food.
• Command: Generally works well in organizations where lines of authority are clear and it is easy to monitor subordinates. An example is in a fast food restaurant when the supervisor tells a worker to clean the tables.
• Majority rule: Generally works well when large numbers of people are affected by the allocation. An example is an election in which people vote whether or not to support a tax to build more parks.
• Contest: Generally works well when the efforts of the participates are hard to monitor. An example is the contest run by Pfizer in which three top managers competed to see who would be appointed CEO.
• First-come, first-served: Generally works well when a resource can be used by only one user at a time. An example is a line at a movie ticket booth.
• Lottery: Generally works well when there is no way to easily distinguish which user of a resource would use it most effectively. An example is the lottery used to allocate cell phone frequencies.
• Personal characteristics: Generally works well when resource use is such that different people consume the same resources. An example is the decision whom to marry.
• Force: Generally works well when used to uphold the rule of law. An example is the state imprisoning thieves and thereby preventing resource allocation by the thief stealing the resource.