Problems of Full employment

Full employment of resources is that situation where all the physical, natural, and human resources are used in the best possible manner. There is the problem of achieving full employment of resources. The problem with the economy is; How to use its available resources, make maximum output with minimum effort and minimum wastages. There shouldn't be misuse or wastage of productive resources since they are limited. Efficient allocation of resources refers to the optimum combination of factors of production.

Full employment is related to the problem of economic efficiency. There shouldn't be misuse or leakages of productive resources available at our disposal. Since they are limited, the allocation of resources should be done efficiently. Efficient allocation of resources refers to the optimum combination of factors of production (factor inputs).

In order to fully utilize the resources, the production should be done at the efficient points of a Production Possibility curve (PPC). Productions done on the points of PPC or PPF indicate that the means and resources are used efficiently and fully. If the production activities are done inside the PPC, then it suggests inefficient or underutilization of available resources. This will lead to the wastage of resources.

The available resources are limited and scarce with respect to their demand and so, an economy cannot afford to waste them. Every economy attempts to utilize its scarce resources by using better technology and a combination of factors of production. So, to ensure full employment of resources, an economy needs to adopt better inputs and technology.