ABSTRACT
Decisions about resource allocation are necessary because we live in a world of scarcity. A review of the ideas listed at Key Points 1.1 and 1.2 should remind you of how central this basic premise is to the study of any branch of economics. To take a surreal example, when you open your front door in the early morning there are not millions of bottles of milk covering the neighbour’s lawn; nor is there no milk. There is just enough bottled milk to meet the demand: say, the two pints your neighbour ordered. What this chapter seeks to explain is how this finely tuned allocation of resources can occur, given the multitude of construction, manufacturing and service resources that simultaneously need to be allocated.
