Resource Balance Analysis

Resource balance analysis is a technique that expands traditional economic analysis to focus on the use of and outputs from various resources. Typical economic analysis focuses on profit or net benefit maximization which is similar to standard financial accounting and answers questions about returns on investment or the production of benefits relative to costs. Another common metric is returns to labor - for an owner of a business supplying their own labor, this is akin to the wage rate and answers the question: How much revenue can be generated for each unit of labor input? This does not necessarily lead to the most efficient use of a scarce resource, however. For example, large farm are extremely productive relative to labor inputs, but smaller more labor intensive farms, are often more productive in terms of output per land or water unit. Resource Balance Analysis focuses on output per resource unit to determine more efficient economic uses, particularly in regards to scale of production.