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Allocation Resource allocation All countries face the age-old economic problem of limited resources and unlimited wants. We all know, for example, that the supply of oil and natural gas in the United States is a limited natural resource. Even the amount of capital resources, such as corporate stocks and bonds that can be raised during a specific period, is limited, Because we live in a world in which the quantity of all resources is limited, we must make choices about how these scarce resources are to be used. To make these choices, we have to answer three fundamental economic questions: • What goods and services will be produced, and in what quantities? What industrial goods and what consumer goods will be produced? Apartments or new houses? Railroad cars or large trucks? • How will goods and services be produced, and by whom? For instance, will energy be produced from coal, natural gas, or nuclear power? • Who will use the goods and services? When the goods and services are divided, who is to benefit from their use? Rich or poor? Families or single people? Old or young? Once these questions are answered, we have a basis for choosing how our resources will be used, how they will be allocated to best satisfy consumers' wants and needs. In a free enterprise economy, allocation of resources also involves other issues. Should the need for business prosperity and success be a consideration? What priority should be given to government's need for resources? In our economy, allocating resources-especially scarce resources- involves all these questions. Allocation can be very complicated, indeed. In the United States, answers to these questions differ from answers in Cuba, the Soviet Union, or Sweden. The different answers are the result of the economic systems used in various countries. Product distribution The issue of allocation is not limited to scarce resources. It also involves the distribution of goods and services to the consumer. In this context, allocation involves an exchange (e.g., money, goods, time, service) between a business and a consumer (e.g., client, customer, patron). In an ideal pattern of distribution in a free economy, the business earns a profit and the customer is satisfied with the good or service: the exchange provides mutual benefit. That is important in a free economy. A tailor able to earn a profit is likely to continue to work hard at the job. Likewise, a customer who likes the price and quality of the tailor's services will continue to use that tailor. When goods and services get to the customers who want or need them and mutual satisfaction occurs, both resources and products have been well allocated. (未完待续)

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