Allocation Of Resources --- Production Factor

In modern economy, producer produces millions of goods and services for people to choose from them. It provides jobs for most people who want to work. It allows us to travel and communicate easily with anybody anywhere in the world. It raises the volume of total output available for citizens to consume. However, the growth of total output depends on the mobilization of natural resources as land, water, forest, environment, different kinds of chemical and organic substances.

Human resources can be used as a means in production. Both human and natural resources will be used in the production function. On the hand, it is felt that these resources are scarce in the economy and human wants are unlimited.,on the other hand. These types of gap raise problem of choice for the production. In this situation, how factors of production are distributed or allocated in the process of production is an important question that needs to be settled. In the other words, due to the problem of unlimited needs and limited means any economy tries to address the important fundamentals problems regarding how to provide maximum satisfaction to the society. This is a big issue for all types of economies.