Underutilization of Resources

Definition

Underutilization of resources occurs when an economy is not using all of its available resources to their full potential, resulting in inefficiency and a lower level of output than what is possible.

Related terms

Scarcity: Scarcity refers to the limited availability of resources relative to unlimited wants, which necessitates choices and trade-offs.

Production Possibilities Curve: The production possibilities curve illustrates the different combinations of goods and services that an economy can produce given its available resources and technology.

Efficiency: Efficiency refers to the optimal use of resources in order to maximize output or achieve a desired outcome.