Resource allocation
What Resource allocation means in Economics GCSE, as defined for AQA.
Definitions of Resource allocation
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Reference: AQA
The process by which scarce resources are distributed, carried out by markets establishing a price that balances consumer demand with producer supply.
Profit acts as a key motivator, prompting a reallocation of resources as higher prices signal that consumers value the product more highly.
Aligning private costs and benefits with social costs and benefits so that resources are allocated efficiently to maximise social welfare.
Economic activity focuses on organising the production and distribution of resources to maximise the satisfaction of infinite desires.
The directing of resources to producing goods, which in an efficient market goes exactly where resources are most valued by society.
The way resources are distributed, which the market fails to do efficiently when the market price does not reflect an external cost.
Topics that use Resource allocation
- Economic activity (AQA GCSE)
- Externalities (AQA GCSE)
- Markets and allocation of resources (AQA GCSE)
- Misallocation of resources (AQA GCSE)
- Policies to correct positive and negative externalities (AQA GCSE)
- The importance of cost, revenue and profit for producers (AQA GCSE)
Related terms
- Circular flow of income
- Economic welfare
- Government intervention
- Market failure
- The price mechanism
- Average cost
- Average revenue
- Basic economic problem
Using Resource allocation in the exam
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