How are resources efficiently allocated?
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According to economists, resources are efficiently allocated by competitive markets. Economists say that efficient allocation happens when consumers are able to choose the goods and services that they want. This is how things happen in a market economy where consumers buy what they want and do not buy what they don't want. When this happens, companies who sell desirable products thrive and resources move to them. Companies that do not sell desirable products decline and fail and resources move away from them. In these ways, resources move to those firms that make the things that people want. This is efficient allocation of resources.
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