Why do problems related to allocation of resources in an economy arises?
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Allocation the right quantity of resources is the most important part of the economy. As the resources in this world are limited but the demands of consumers are infinite or limited.
The resources are scare be it land, labour, capital or enterprise in nature. Thus the problem of allocation of resources in the best possible manner arises. Be it in terms of choices for which good to produce and which one not to produce or be it in terms of what to buy and what not to buy.
The resources are scare be it land, labour, capital or enterprise in nature. Thus the problem of allocation of resources in the best possible manner arises. Be it in terms of choices for which good to produce and which one not to produce or be it in terms of what to buy and what not to buy.
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A very popular question!
The Problem of allocation of resources arises mainly because the resources are scarce. This leads us to the question for which scarce good to produce or in other way, which wants should be satisfied and which should not.
Therefore, the society has to decide now what commodity to produce in volume, which will withdraw resources of other goods. Thus, it makes the resources scarce if society prefers to produce one good thereby reducing the production of other goods.
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