Resource Allocation

Senyo Adjibolosoo

Resource allocation refers to the distribution of resources among alternative uses. A low supply of a resource relative to its demand drives allocation of that resource. Choices in resource allocation through the market mechanism reflect society's preferences and demands. Because economists define demand as want supported by purchase power, the value of goods and services is determined through consumer “votes.” An individual's purchase power is reflected in the importance of that individual's vote. Hence, resource allocation is decided by the voters' purchase power and preferences. Channeling resources into their best use produces the most efficient results of allocation. Groups and states have developed various allocation techniques to make the best use of resources. The two primary techniques for resource allocation are evident in the two economic systems known as capitalism and socialism. In a capitalist system, resource allocation is carried out through independent interaction between consumers and producers. In a ...

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