Resource allocation
Definition. Resource allocation is the process by which an economy decides how its scarce factors of production are distributed among competing uses to answer the central questions of what to produce, how to produce it, and for whom. The chosen pattern of production reflects society priorities and the constraint of limited resources.
Allocation can occur through the price mechanism, by government direction, or a mix of both. An efficient allocation directs resources to where they generate the greatest net benefit to society.
This term belongs to Scarcity and the Central Economic Problem in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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