Answer to Question 1
Resources can be allocated using:
Market price: People who are willing and able to pay the price get the resource.
Command: Someone in command decides who gets the resource.
Majority rule: The majority vote decides how resources are allocated.
Contest: Winners receive the resource.
First-come, first-served: People first in line get the resource.
Lottery: Randomly selected winners receive the resource.
Personal characteristics: People with the right characteristics get the resource.
Force: The stronger person or group gets the resource.
Answer to Question 2
The demand for an input is dependent on the demand for the output the input can be used to produce.
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