Theories of resource allocation hold a special pride of place in modern economics. Price theory seeks to explain the role of a price system in allocating productive factors to firms, and allocating the output of those firms to households. This theory, rich and complex in its conclusions, stands out as the supreme accomplishment of neo-classical economics. The foundations of this theory, however, are less frequently explained, and the organising ideas, from the theory of choice, are usually bypassed on the way to utility and production functions.
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