America’s first Honour winner for economics, the late Paul Samuelson, is commonly credited with providing the primary clear and easy explanation of the economic problem – namely, that so on resolve the economic problem societies must endeavour to answer three basic questions which are –
- What to Produce?
- How to Produce?
- Whom to Provide for?
Allocation of resources refers to the matter of assigning the scarce resources in such a fashion so maximum wants of the society are fulfilled. As resources are the limitation in the relation towards the unlimited wants, it’s extremely important to economize their use and utilize them within the most effective manner.
- An economy has the necessity to allocate all its resources and choose things from different potential bundles pf goods – (What to Produce)
- Different techniques of production to choose out from – (How to Produce)
- And within the end, the consumption of products – (Whom to supply for)
