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Managing Scarce Resources Essay

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Below is an essay on "Managing Scarce Resources" from Anti Essays, your source for research papers, essays, and term paper examples.

Managing scarce resources is one of the fundamental economic problems. The Australian economy is a place where limited resources must be allocated between many competing uses. It is obvious that with only a limited amount of any one resource, not all wants or needs can be met. Economists describe this situation as relative scarcity and, it occurs because most resources are finite, but needs and wants are infinite. To deal with scarcity all economic agents need to make decisions regarding what to produce, how much to produce and for whom to produce. Predominately, in Australia the market answers these questions via the price system and then allocates the limited resources in the most efficient way.
Resources can be divided into three groups; natural, labour and capital. The efficient use of these resources is critical for a robust economy, particularly with regard to microeconomics, which can then provide a solid basis to analyse the macroeconomic conditions or whole economy. Microeconomics describes the behavior of the small economic agents or individual sectors that make up the whole economy. Microeconomics explores the behavior of individuals, households and businesses; what motivates each to purchase or produce goods and services and how each responds to the changing conditions in the market. Microeconomics is concerned with the things that affect a particular firm, industry or market. For example, it would consider all the issues with regard to the supply and demand for housing in the property market, perhaps suggesting reasons why conditions are boom or bust, and then making future predications about the direction of the property market. If these predications were favorable, resources would continue to be allocated to this market; however, if the predications were unfavorable, resources would be reallocated to other parts of the economy where the economic profit was better. For this reason microeconomics is extremely important in the allocation of resources...

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