British economist Lionel Robbins defined economics as the study of the use of scarce resources which have alternative uses. And what does scarce mean? American economist Thomas Sowell writes in Basic Economics that scarce means "what everybody wants adds up to more than there is".
In simple English, there isn't enough going around for everybody. Now, take the case of the men's Indian Premier League (IPL), the world's most famous Twenty-20 (T20) cricket league, usually played from late March to late May every year. There are 10 teams that play the tournament. They have a certain amount of money which they can use to buy players in auctions and these players then play for the team.
The amount of money that teams can use to buy players is limited. The same is true about the number of players who are skilled enough to be picked up by teams.
So, there is a scarcity of money and there is a scarcity of players. In this scenario, the teams need to allocate money carefully to buy players they think can help them win the tournament.
Typically, every firm makes similar decisions at different points of time. Companies decide whether to enter or not enter a particular business.
They decide to allocate a certain amount of money to enter a certain business.
Then they decide to spend that money in different ways towards different aspects of the business, in order to first get it going and then to keep it running. They also need to decide who to recruit-top management, middle management and foot soldiers-who can then run the business, hopefully successfully. Over a period of time, who to fire and who to retain, also becomes an important decision. Each of these decisions stems from scarcity of resources and is an allocation decision because money and people with adequate skills are usually both scarce.
Denne historien er fra January 02, 2024-utgaven av Mint Mumbai.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra January 02, 2024-utgaven av Mint Mumbai.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
Air fares in Sep quarter rise, Q3 may be worse
Multiple public holidays have sparked demand for short trips to domestic destinations, said Indiver Rastogi, president & group head of global business travel at Thomas Cook (India) and SOTC Travel. This year, Independence Day, Janmashtami, Onam, Eid and Ganesh Chat-
Yes, the world is hotter than it has been in 2,000 years or so
A scientific study of tree rings confirms global warming is for real
As a non-resident, is there a tax liability on exiting Indian MFs?
I have been investing in mutual funds for the past four years. Last year, I moved to Dubai and am currently a non-resident Indian NRD). Say, if] exit all my mutual fund investments now, would I have zero tax liability? —Name withheld on request.
Mergers off but PSB privatization still on
T 'he Centre doesn't have any plan to merge public sector banks (PSBS) in FY25, though it will not ditch plans to privatize PSBs during the fiscal, two people aware of the matter said.
Think Tesla Is In Trouble? Pity Even More Its Wannabe EV Rivals
The combined market value of six prominent wannabes hit 400bn in 2021, but today they are worth 65bn
Has The Growth Of Our Economy Translated Into Domestic Jobs?
While the covid shock and other setbacks got in the way, data indicates that employment in India is on a firm recovery path
Financial Sector Reforms Plan To Be Unveiled Post Elections
The govt will cut its stake in five PSBs this fiscal to comply with Sebi’s listing guidelines
Generative AI Is Not Ubiquitous In The Business World-Not Yet
While some AI tools racked up users, some firms are proceeding with caution, or not at all
Wipro’s CEO switch was not about its share price
Shareholder value data does not explain the firm's change on top. In a flux-filled field like infotech, business performance counts for more and Wipro's challenge still seems quite steep
How not to blow a major chunk of your travel budget on visas
Rejection of visas can impact your travel costs, especially when you have to cancel flight and hotel bookings