Problem of Choice,

Allocation of Resources
WHAT IS CHOICE?
• Choice involves mentally making a decision judging the merits of
multiple options and selecting the one or more of them.
• Simple choices might include what to eat for dinner, what to wear on
Saturday party etc.- these are the choices that have relatively low
impact on the chooser’s life overall
What is choice problem in economics?
Scarcity refers to the finite nature and availability of resources while
choice refers to people's decisions about sharing and using those
resources. The problem of scarcity and choice lies at the very heart of
economics, which is the study of how individuals and society choose to
allocate scarce resources.
Resource
An economic or productive factor required to accomplish an activity, or
as means to undertake an enterprise and achieve desired outcome.
The Three Most Basic Resources
Land Includes all natural resources (“gifts of nature”) used in the
production process, such as arable land, forests, mineral and oil
deposits, and water resources.
Labor Consists of the physical and mental talents of individuals used
in producing goods and services.
Capital Refers not to money but to tools, machinery, and other
productive equipment.
Resource Allocation
Resource allocation is used to assign the available resources in an
economic way.
In project management, resource allocation is the scheduling of
activities and the resources required by those activities while taking
into consideration both the resource availability and the project time.
Resource Allocation Plan
1.Basic Allocation Decision
2.Contingency mechanisms
1. Basic allocation decision
• The choice of which items to fund in the plan
• What level of funding it should receive
• Which to leave unfunded
• The resources are allocated to some items, not to others
2. Contingency mechanisms
• A.There is a priority ranking of items excluded from the plan, showing
which items to fund if more resources should become available.
• B.There is a priority ranking of some items included in the plan,
showing which items should be sacrificed if total funding must be
reduced.
Resource leveling
A project management technique used to examine unbalanced use of
resources (usually people or equipment) over time, and for resolving
over-allocations or conflicts.
Leveling resources involves redistributing an imbalance of allocated
work. It assists project team members by keeping them from becoming
overwhelmed, working overtime, or running into project burnout.
Resource Over-allocation
Over-allocation of a resource is when a resource has been assigned
more work than can be completed during normal work hours. Resource
allocation often leads to overtime and overspending on financial
resources.
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