Economics Is The Allocation Of Resources Essay

Economics Is The Allocation Of Resources Essay

Length: 1574 words (4.5 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Question 1 – Economic models
Economics is the allocation of resources available to satisfy people’s needs and wants for goods and services (Layton, Robinson, & Tucker, 2016, p. 5). An economic model is “a simplified description of reality used to understand and predict the relationship between two variables” (Layton, Robinson, & Tucker, 2016, p. 8). That is, to forecast or predict, changes in key variables such as price to understand the effects of the changes and observe patterns (Layton, Robinson, & Tucker, 2016, p. 9). The results observed in the model contribute to the decision-making process for the allocation of resources.
However, a model only takes into consideration the variables that are assumed to be the most important to explain the theory. For example, several variables such as income, price of petrol, weather and type of car owned may influence petrol consumption. In this case, the economist must assume which of these variables is the most important in relation to the consumption of petrol making a subjective decision. Thus, it could be argued that economics models are false because they only look at the variables that are assumed important by the individual. In addition, as the information is false then has no reliable purpose.
The standard model of supply and demand is used to determine the level of supply and demand as a function of price and other variables such as income. They aim is to find the equilibrium which is the point where the price at which the quantity demanded by consumers is equal to the quantity supplied by suppliers (Layton, Robinson, & Tucker, 2016, p. 71). For example, lets assume that the demand and supply curve in Figure 1 shows the market for the consumption of bread.
Figure 1 – Hypothetical ...


... middle of paper ...


... would source Australian steel from land to make the submarines (Henderson, 2016). According to (Henderson, 2016) the project would create 2,800 Australian jobs in the shipbuilding and supply chain processes. Thus, injecting specialised inputs in to the labour market in South Australia and other areas in the country such (Henderson, 2016) that contribute towards economic growth.
Figure 5 - Economies of scale (Layton, Robinson, & Tucker, 2016, p. 146)


However, as seen in figure 5 the project must be cautious not to encounter diseconomies of scale where the project grows output beyond management levels due to labour policies or inefficient management.
As seen above the choice to use only one contractor for the production of submarines is justified as the government needs to control and focus production factors to create economy growth through efficient production.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

An Efficient Allocation Of Resources Essay

- An efficient allocation of resources is always attempted to be achieved. Whether it be by a household or a firm, both attempt to maximise the welfare benefits they receive from using the resources they have available to them. Production and cost theory enable firms to have a clearer picture of how their resources can be allocated, and therefore they are essential to an efficient allocation of resources. The production theory mainly focuses on the relationship between the inputs that a company will inject into the production process, and the outputs that will come out of it....   [tags: Economics, Economics of production, Costs]

Better Essays
1351 words (3.9 pages)

Allocation of Resources Essay

- Economics is the allocation of scarce resources among competing ends. To some extent, virtually everything is scarce - money, food, water, dates for the prom... but some resources are scarcer than others, and deserve special attention from those with the tools to allocate them properly. Basically scarce resources can be defined as the limit a society has on a particular resource that is less obtainable than others which are readily attainable. Some examples of some scarce resources that are found commonly in today’s society are clean air, oil, trees, coal, and natural gas....   [tags: essays research papers]

Free Essays
433 words (1.2 pages)

Economics : Economics Vs. Macroeconomics Essay

- Everyone is always talking about the economy. But what about the economy. Economics deals with a wide range of financial issues from in the market to our personal lives. The economic environment of both the market and consumers is key to success. Economics has a direct effect on the wealth and happiness of almost everything and everyone. Generally, the textbook definition of economics is the study of how society uses resources to produce goods and services and distribute them for consumption (Nickels, McHugh & McHugh, 2016)....   [tags: Economics, Macroeconomics, Unemployment]

Better Essays
1993 words (5.7 pages)

Economics of Information Essays

- Introduction There have been discussions among scholars in developed countries regarding economics of information. Developed countries includes Australia, New Zealand, United States, Ireland, Germany, Japan, Canada and many more are countries that have a high level of development according to some criteria. The criterion is income per capita; countries with high gross domestic product (GDP) per capita would thus be described as developed countries. Another economic criterion is industrialization; countries in which the tertiary and quaternary sectors of industry dominate would thus be described as developed....   [tags: Economics ]

Better Essays
1078 words (3.1 pages)

Allocation of Scarce Healthcare Resources Essay

- Resources have always been inadequate for food, economics and healthcare and all scarce resources are rationed in one way or another. Healthcare resources can be in the forms of medicine, machinery, expensive treatment and organ transplantation. For decades, allocation of healthcare resources in an equitable manner has always been the subject of debate, concern and analysis, yet the issue has persistently resisted resolution. Scarcity of resources for healthcare and issue of allocation is permanent and inescapable (Harris, “Deciding between Patients”)....   [tags: health, medicine]

Better Essays
1808 words (5.2 pages)

Health Economics Essay

- The value of healthcare professionals and decision makers understanding the discipline of health economics. Healthcare professionals and decision makers understanding the discipline of health economics is very important. Health economics can be classified as a branch of health economics as it relates to the healthcare system by efficiency and effectiveness (Teitelbaum & Wilensky, 2007). Understanding the discipline of health economics help healthcare professionals and decision makers in dealing with the provision, delivery and use of healthcare goods and services....   [tags: Health economics, Health care, Health insurance]

Better Essays
1109 words (3.2 pages)

What Makes Islamic Economics A Moral Economy? Essay

- While at first it might appear that Islamic Economics is just a kind of economics with the moral values, a closer look reveals that its values are what makes it not a pure economics but instead a moral economy. This essay will demonstrate why should Islamic Economics be considered as a moral economy rather than economics by discussing the foundational principles, the economic objectives, the real problem of the economy in the developing countries, and the economic rationale. The final part of the essay will define what makes Islamic Economics a moral economy....   [tags: Economics, Economy, Morality]

Better Essays
1248 words (3.6 pages)

Cost Allocation Essay

- Cost allocation is the process of identifying, aggregating, and assigning of cost to various separate activities. There is no overly precise method of charging cost to objects, hence resulting to approximate methods being used to do so. Amongst the approximation basis used includes square footage, headcount, cost of assets employed, and electricity usage amongst others. The main aim of cost allocation is to spread cost in the fairest possible method and also to impact the behavior pattern of the cost....   [tags: Economics]

Better Essays
1241 words (3.5 pages)

Essay on Health Economics

- Health economics is concerned with the efficient and equitable allocation of resources in the context of scarcity and uncertainty, and is relevant to individuals, practitioners, governments and markets. Changing factors such as an aging population and new technologies becoming available are increasing expectations from people as a whole throughout the world, and decision makers must make rational choices to maximise benefits to population health whilst working with limited resources. 2 summarises this by asserting that "health care resources in every setting are always constrained, while unlimited demand is observed"....   [tags: Health Care Resources, Medical Policy]

Better Essays
1706 words (4.9 pages)

The Purpose Of Studying Economics Essay

- Joan Robinson (1903-1983) “The purpose of studying economics is not to acquire a set of ready-made answers to economics questions, but learn how to avoid being deceived by economists,” said by Joan Robinson (Feb 03 2009) Throughout the years society has created a basis of what an economy is and how it is structured. Economists are said to be disciplined in the arts of economies, they know the ins and outs of every nook-and-cranny there is. They’ve studied the social science so well that they’re able to change our thoughts on how the economy should be run and we rely on them, which makes Joan intelligent for her quote....   [tags: Economics, Monopoly, Neoclassical economics]

Better Essays
1002 words (2.9 pages)