What is the efficient resource allocation in a country?

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Efficient resource allocation in a country is when the production of goods and services satisfies the needs of the majority. In this case, high-quality goods are produced with the available resources. In other words, limited resources are used to satisfy the unlimited wants of a population. Since it is impossible...

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Efficient resource allocation in a country is when the production of goods and services satisfies the needs of the majority. In this case, high-quality goods are produced with the available resources. In other words, limited resources are used to satisfy the unlimited wants of a population. Since it is impossible to satisfy every person’s wants, a country is said to have efficient resource allocation if it caters to the majority of the population’s needs. Resources can be in the form of labor, finances, and equipment.

Efficient resource allocation helps a country be sustainable. However, for this to be achieved, a country must invest in its population and ensure that it has adequate infrastructure and sufficient energy for the production of goods and services.

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Allocative efficiency is achieved in a country when the country’s economy is producing the goods and services that allow the maximum possible consumer satisfaction.

There are two aspects to this definition.  First, the economy has to be producing as much as it possibly could be.  In other words, the economy has to be working as efficiently as possible.  There cannot be any resources that are not being used. There cannot, for example, be machines in factories that are lying around, not being used. All available resources have to be used to their maximum potential.

Second, the economy has to be producing the optimal mix of products. It has to be producing the things that people want.  An economy is not allocating resources efficiently if it is working with complete but efficiently but is making things that people do not want.

So, the efficient allocation of resources in an economy occurs when all the resources of the country are being used as efficiently as possible to make the mix of goods and services that the country’s people want.

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