Resource allocation: an economic problem Selected problem and context The problem I have chosen to investigate is the allocation of resources, which are mainly money, by a local authority , i.e. the Borough of Westminster Council. The reason this resource allocation has become an economic problem is because money is a limited resource, so there is scarcity and the board has to make choices about how to allocate the resources it has been allocated. This type of resource allocation is different from that faced by a private company as they have the opportunity to expand and increase their resources, whereas local authorities often lack the ability to increase their resources overall, rather than diverting resources from one need to another. Westminster council must allocate money to various departments from this general fund. This money is to be allocated to the various departments that require funding such as education, environment and leisure, finance, housing, planning, transport and social services. Not only must the municipality simply allocate resources to the various departments, but it must also evaluate how much of the allocation, for example for education, it chooses to spend using its own staff and facilities to produce a service, rather than outsourcing other companies to provide them with work. To a certain extent the department can use existing funded structures such as administration and technology to produce a service such as transport and planning. An example of this can be the way road maintenance is carried out. For many small roads, the local authority transport department may be able to resurface the roads for a very low cost, for example £1,000 for 10 metres. This is very efficient for both the local authority and much of the capital; work, land and business are already in place. However, for bridges, for example, the local authority does not have the equipment, i.e. the capital and manpower, to provide the repair service. In this case it would no longer be efficient to acquire the labor and capital needed to repair the bridge. This could work out at £10,000 per metre. At this point it is a matter of choosing whether to contract the bridge repair to a private company that has the capital and manpower to provide this service more efficiently, or acquire the resources needed to perform the task itself.