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Economic Systems
In the foregoing analysis we have explained how the free market economic system which is historically called capitalism works and what are its merits and drawbacks. We have also studied how at present in the market economies government plays a role in improving the functioning of market economic system. How an important question is if there is any alternative economic system known as authoritarian socialist system or command economy was adopted in erstwhile soviet Russia, china east European countries such as Poland Czechoslovakia. In this authoritarian socialist system or command economy basic economic problem of what how and for whom to profuse etc are resolved through a combination of state ownership of productive enterprises and centralize planning. It is government or any central authority set up by it that decides output targets for each public enter price allocates resources to the mind fixes prices of various goods and series and income (wages, salaries) of various types of workers.
In a centrally planned socialist economy there exists a central planning authority which organizes and regulates the various economic activates. Thus it is the central planning authority which determines what the various productions unto is shllproduce what the various individual shall obtain for consumption and as a result what shall be left for investment further it decides whist type of investment shall be made.
It should be realized that the organization of the various economic activates by one planning authority is full of administrative and economic difficulties. The authority is faced with the political and administrative problems of getting their decision implemented. In other words there are problems of putting the various decisions into effect. Moreover the planning authority is faced with an overall economic problem namely how to use the limited productive resources for achieving the best possible results. The particulars purpose for which resources ar to be used have to be decided. In other words allocation of resources as between various kinds of consumer goods, and as between consumer goods and capital goods and as between civilian goods and war goods has to be decided. In other words allocation of resources as between various kings of consumer goods, and as between consumer goods and capital goods and as between civilian goods and war goods,, has t be decide taking of all these decisions is indeed a very difficult takes besides decisions have to take about the particular techniques with which various products ar to be proceed and about distributing goods among the people.
It may be note that planning of actual production of various products is greatly difficult due to the fact that technical relations between different kinds of products are very much complicated. For example to build ships it apparently seems that only still and other materials which makeup ships are required? But little ore thinking will reveal that arrangements for the complicated process of production of still and other materials have to be mad3 before still and other materials become available of se in ship building. Moreover various types of machinery would have to be made for converting iron or into still as well as converting still into ships. Further the arrangements of coal electricity and transport have to be made if the production of steel and ships is to become possible. Thus technical relations between different kinds f output are so complicated that for carrying out the decision to produce more of one kind of product adjustments on servile other lines have to be made.
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In a centrally planned socialist economy there exists a central planning authority which organizes and regulates the various economic activates. Thus it is the central planning authority which determines what the various productions unto is shllproduce what the various individual shall obtain for consumption and as a result what shall be left for investment further it decides whist type of investment shall be made.
It should be realized that the organization of the various economic activates by one planning authority is full of administrative and economic difficulties. The authority is faced with the political and administrative problems of getting their decision implemented. In other words there are problems of putting the various decisions into effect. Moreover the planning authority is faced with an overall economic problem namely how to use the limited productive resources for achieving the best possible results. The particulars purpose for which resources ar to be used have to be decided. In other words allocation of resources as between various kinds of consumer goods, and as between consumer goods and capital goods and as between civilian goods and war goods has to be decided. In other words allocation of resources as between various kings of consumer goods, and as between consumer goods and capital goods and as between civilian goods and war goods,, has t be decide taking of all these decisions is indeed a very difficult takes besides decisions have to take about the particular techniques with which various products ar to be proceed and about distributing goods among the people.
It may be note that planning of actual production of various products is greatly difficult due to the fact that technical relations between different kinds of products are very much complicated. For example to build ships it apparently seems that only still and other materials which makeup ships are required? But little ore thinking will reveal that arrangements for the complicated process of production of still and other materials have to be mad3 before still and other materials become available of se in ship building. Moreover various types of machinery would have to be made for converting iron or into still as well as converting still into ships. Further the arrangements of coal electricity and transport have to be made if the production of steel and ships is to become possible. Thus technical relations between different kinds f output are so complicated that for carrying out the decision to produce more of one kind of product adjustments on servile other lines have to be made.
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Topics
Economies In Consumption
Economies In Production
Welfare Economics Theorem
Market Failure
Pareto Criterion
Welfare Economics Value
Welfare Economics
Asymmetric Information
Present Values
Insurance Market
Intertemporal Choice
Intertemporal Analysis
Market Signalling
Perpetuity
Stocks Versus Flows
Lemons Market
Principal Agent Problem
Moral Hazard
Oligopoly Characteristics
Oligopoly Price Determination
Firms Interdependence
Price Discrimination Oligopoly
Oligopoly Price Output
Price Discrimination Degrees
Price Discrimination Conditions
Price Discrimination Possibility
Price Discrimination Timing
Profit Maximization
Price Theory
Profit Assumption
Profits Theory
Economic Rent Rise
Selling Costs Effects
Selling Costs Role
Economic Systems
Capital Formation
Comparative Statics
Competitive Markets
Economic Dynamics
Economic Statics
Economic Growth
Microeconomics Importance
Inductive Method
Production Inefficiency
Micro-Macro Interdependence
Microeconomics Scope
Scientific Theory
Economic Laws Nature
Production Possibility Curve
Economic Hypothesis
Economics Scarcity
Inductive Methods Steps
Consumer Surplus Applications
Cardinal Utility
Demand Changes
Complements And Substitutes
Consumer Surplus Concept
Consumers Equilibrium
Consumer Surplus
Demand Determinants
Demand Curve
Demand Schedule
Elasticity Tax
Demand Extension
Income Elasticity
Indifference Curve
Indifference Curve Approach
Indifference Curves
Demand Theory
Substitution Marginal Rate
Marginal Utility Rate
Market Demand Curve
Market Demand Function
Marshalls Consumer Surplus
Consumer Surplus Measurement
Price Elasticity Measurement
Preference Hypothesis
Price Consumption Curve
Price Elasticity Importance
Price Elasticity Determinants
Demand Price Elasticity
Revealed Preference Theory
Substitution Elasticity
Demand Law
Interest Classical Theory
Productivity Concepts
Rent Concepts
Demand Factor Determinants
Fishers Interest Theory
Functional-Personal Distribution
Interest
Keynes Interest Theory
Land, Rent, Cost
Distribution Theory
Loanable Funds
Marginal Distribution
Profits Dynamic Theory
Quasi Rent
Rent Concepts
Rent Ricardian Theory
Risk And Uncertainty
Factors Supply
Wage Determination
Average Fixed Cost
Average Total Cost
Capital
Douglas Production Function
Compensation Principle
Marginal Returns
Capital Growth
Scale Economies
Technical Substitution
Entrepreneur
External Economies
Supply Factors
Production Factors
Isoquants Properties
Human Capital
Profit Innovation Theory
Interest Theories
Isoquants
Labour
Land
Production And Cost
Linear Production Function
Long Run Equilibrium
Marginal Cost
Marginal Substitution
Monopoly Characteristics
Monopoly Price
Monopoly Capacity
Monopsonistic Discrimination
Opportunity Cost
Production Function
Returns To Scale
Capital Role
Supply
Rent Concepts
Fixed Variable Costs
External Economies Types
Advertising Effects
Average Revenue
Collusive Oligopoly
Competitive Strategy
Contestable Markets
Dominant Strategy
General Equilibrium
Monopolistic Equilibrium
Monopoly Features
Industry Equilibrium
Firm And Pricing
Supply Curve
Marginal Revenue
Market
Market Forms
Market Cartels
Monopoly Measurement
Monopolistic Competition
Monopoly
Monopoly Sources
Newmann Game Theory
Partial Equilibrium
Price Determination
Price Leadership
Thumbs Price Rule
Product Differentiation
Rent Control
Sales Maximization
Selling Costs
Static Dynamic Stability
Time Element Price




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