Describe socialism s calculation problem by Dr. Robert Murphy @Mises

Question 7 / 15: Describe socialism's "calculation problem" (which is NOT the same as the incentive problem).

Answer:

If the government owns all of the resources, then there can be

no market prices for them. That means the government, when

drawing up the detailed plans for what should be produced, won't

have any way to quantify the costs of their decisions. The planners

won't know if they are using resources efficiently.

Sample Partial Credit Answer

The government won't be able to calculate if it is doing a good job

in its plan for the economy.

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https://www.jobilize.com/socialism-the-command-economy-by-dr-robert-murphy-mises

Socialism: The Command Economy

Access: Public Peer Review

Dr.Robert MurphyAssociated Scholar

Mises Institute

USA

Attribution: Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY

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