advantages and disadvantages of leaving the allocation of a country's resources to the price mechanism?

Question

i have to write to my goverment it is an assignment at my college to do with my countrys recourses such as wheat ext.

Answer 1

As it is only the government that can interfere with the operation of the price mechanism, a good place to start is where and why the government does this now. BTW 'wheat' is NOT a natural resource and I will assume that you are in the USA.

The government knows that a large oversupply of a product, such as wheat, will cause the price of wheat to fall so it pays farmers not to grow wheat. The farmers, who would have grown wheat, use the money to sow other crops; the economy gets other goods it requires and the price of wheat stays 'high'. Disadvantage? prices remain high, however they don't skyrocket if and when supply falls.