Why economics deal with allocation of resource
Answers
Before discussing the given question, we must have some basic knowledge about economy. So let's discuss them firstly!
What is an economy? Why to study economics?
An economy is the study of human behaviour, it deals with how a society fulfills it's unlimited wants with limited resources. The major reason for the study of economy is ' Scarcity '.
Introduction about resources :-
All those things which helps us to satisfy our needs and wants are termed as resources. Resources should be properly or fully utilized because they are vital for the development. Resources are very important for every society.
Need for the allocation of resources :-
Allocation means the distribution of existing resources for different uses to get maximum utilisation. For example both human resources and machinery (technology) can be used in a handloom industry for the production of clothes. Machineries are expensive whereas human labour are very cheap and can be easily affordable for the production in countries like India or China. Machineries can produce more quantity in less time whereas production capacity of labour is low. In this case, that production technique would be used which gives maximum aggregate satisfaction. For example, labour in countries like India, Bangladesh or China is easily available whereas technology is some what expensive. On the other hand countries like USA where there is a scarcity of human labour would choose capital intensive technology ( machinery ) for the production. This depends on the availability of resources.
Hence economics deals with the allocation of resources.