9708 A2 Economics — Unit 1.1: Efficient Resources Allocation

Unit 1.1: Efficient Resources Allocation
Allocation of resources
• Allocation of resources: is the distribution of scarce resources to producers & consumers
within the economy.
• The aim of allocation of resources is to achieve the greatest happiness for the greatest
number of people can be linked to moral theory of utilisation by English philosopher Jeremy
Bentham.
• According to this theory, the best undertaking is one which produces the most happiness or
utility to the most number of people.

Efficiency
• The theory of utilisation is in line with the concept of economics efficiency.
• Economics Efficiency: refers to the best use of scarce resources to serve each individual,
minimising waste.
• Efficiency:
o Minimum waste
o Least amount of inputs to produce a quantity of output.
o Allocating researches in the most socially optimum manners
• When do we say something is inefficient?
o High average cost
o Slack
o High wastage
o Produce goods & services that are low in demand
o Over production
o Under production

Productive efficient
• Productive efficiency: where firm uses the least possible resources to produce the greatest
output at minimum cost.