Disadvantages of the planned economy, Managerial Economics

Assignment Help:

Disadvantages of the Planned System

The centrally planned economies suffer from the following limitations:

Lack of choice:  Consumers have little influence over what is produced and people may have little to say in what they do as a career.

Little incentive:  Since competition between different producers is not as important as in the market economy, there is no great incentive to improve existing systems of production or work.  Workers are given no real incentives to work harder and so production levels are not as high as they could be.

Centralised control:  Because the state makes all the decisions, there must be large influential government departments.  The existence of such a powerful and large bureaucracy can lead to inefficient planning and to problems of communication.  Furthermore, government officials can become over privileged and use their position for personal gain, rather than for the good of the rest of the society.

The task of assessing the available resources and deciding on what to produce, how much to produce and how to produce and distribute can be too much for the central planning committee.

Also the maintenance of such a committee can be quite costly.


Related Discussions:- Disadvantages of the planned economy

Marginal damage curve , Consider a model world which is subject to a risk o...

Consider a model world which is subject to a risk of global climate change. The damage is known to be from greenhouse gas (GHG) emissions as indicated by the marginal damage curve

Characteristics of oligopoly, Oligopoly can be characterized as follows: ...

Oligopoly can be characterized as follows: Small Number of Sellers: There are more than one sellers of a product though; the number isn't so huge in order to produce perfect

Concept and phases of trade cycle , CONCEPT AND PHASES OF TRADE CYCLE ...

CONCEPT AND PHASES OF TRADE CYCLE Broadly speaking, the trade or business cycles are those fluctuations which recur in economic activity with a certain degree of regularity fo

Distinguish between moral hazard and adverse selection, Question: i) T...

Question: i) The manager of Top Rock Company is introducing a new product that will yield $200 millions in profits if the economy does not go into recession. However, if a rec

Resources, “Managerial economics involves use of economic analysis to make ...

“Managerial economics involves use of economic analysis to make business decisions involving the best use of a firm’s scarce resources” Explain the statement with suitable example.

Manaerial economics, define scarcityand oppurtunity cost.show how these con...

define scarcityand oppurtunity cost.show how these concepts are useful in managerial decision making

Cross elasticity, Cross Elasticity Cross elasticity of demand measures...

Cross Elasticity Cross elasticity of demand measures the degree of responsiveness of the quantity demanded of one good (B) to changes in the price of another good (A).  It is

Importance of cross elasticity, Importance of Cross Elasticity Knowled...

Importance of Cross Elasticity Knowledge of cross elasticity is necessary when the government wants to impose a tariff on an imported commodity to protect a domestic industry.

What do you mean by oligopoly, Q. What do you mean by Oligopoly? Type o...

Q. What do you mean by Oligopoly? Type of market condition that is most appropriate in the today's economy, is oligopoly. It's characterised by mutual interdependence among a f

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd