Human wants exceed the means to satisfy these wants. (wants > means)

Key Questions[]

  • Who gets these resources?
  • What is produced?
  • How will they be produced (are we going to use labor and capital, these both have properties of scarcity)?
  • When will things be produced?
  • What is forgone when we decide what to produce?


  • Auction: This stands loosely for a market process
  • Gift: goes to those among us that are favored for whatever subjective reason
  • Government fiat: The government enforces contract, transfer, political allocation.
  • Violence: I simply take what I want.
    • One theory of the origin of law was to preserve property rights without resorting to violence.

Note: these seem ranked, but economic theory does not give insight into subjective evaluation.