Resource Allocation: Explaining Economists' Economic Problem, Market Allocation, Market Failure, and Government Intervention

Resource allocation

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
An explanation of what economists mean by the economic problem.........................................3
Explaining how markets allocate scarce resources in the following...........................................4
Explaining the term market failure in terms of the inefficient use of scarce resources with
examples......................................................................................................................................4
Explain how demand and prices can be affected by tastes and fashion......................................5
Meaning of externalities and how government intervene to correct them..................................6
How government influence the allocation of merit and demerit goods and create funding for
public goods.................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Resource allocation simply defines as the availability of resources which can be used in various
ways, markets and planning. It is important to consider this process as it allows an individual to
plan and prepare the project implementation and can be able to achieve the set goals and targets.
In general, the resource allocation focuses on the production where how the goods are produced,
what the goods will be and for whom this is manufacturing by the organization. However, it is
important to consider and also provided beneficial outcome where it helps the project to get
successful. The current report will illustrate the brief explanation of the economist and the
economic problem. Also, It will include the brief about the market allocation scarce resources in
different areas (Amer, Ahmad and Hoteit, 2021). The report will describe the concept of market
failure due to inefficiency of scarce resource and how demand can be affected by taste and
fashion. At last, it will provide the description in regard to allocation of merit and demerit and
goods and creates funding for goods.
MAIN BODY
An explanation of what economists mean by the economic problem
An economist is who study the reasoning for taking the decision which people take to boost up
their profits and for creating the better public policy from where they can easily obtain the right
outcome. In other terms, it can be understood as a science where the satisfaction of needs and
desires is allocated through allocation of scarce resources which can be used in different ways.
However, the economic problem defines to any particular situation where the economy is
concerned with the production of the goods and services which is required to satisfy the needs
through different usage of scare resources. The economic problem is mainly categorized and
concerned with three areas which is the what good has to be produced, how to do the production
and for whom particular people the production is taking place in efficient manner. These three
factors are describing the problem of the economy and needs to be clarified and solved by an
individual for boosting up the profit and productivity in definite manner (Qiu, Wei, Feng and
Zhang, 2019). However, the economic problem is divided into two factors which are
microeconomics and macroeconomics. The factor microeconomic includes how to deal with
externalities, national utilities and such more. Whereas, the macroeconomics explains how to
solve unemployment, reduce inflation and increasing of living standards.