Define or Explain the following concepts. 5) Resource allocation

Define or Explain the following concepts.

5) Resource allocation

ANSWER:

Resource allocation refers to the distribution of resources among competing groups. These resources may be natural resources, money, labour, etc., which the producers use in production processes to produce goods. Resource allocation involves making decisions regarding how the resources should be allocated to each group such that they can be utilised in the best possible manner providing maximum gains to the society. The decision regarding resource allocation is particularly important because resources are scarce and also have competing uses. Thus, effort must be made to use them efficiently and optimally.

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