economics addresses a central social dilemma, how to allocate a scarcity of resources to a multiplicity of com- peting ends. Whatever the available resources of a society, there are always greater demands on those resources than can be satisfied. Education competes for resources with such other social priorities as health, transportation, defense, criminal justice, and private con- sumption. Economic analysis attempts to determine how to allocate resources to different economic and social ac- tivities to maximize social well-being. Using various economic criteria and analytic tools, it is possible to suggest the optimal size of the educational sector as well as the means for financing it.