Central planning usually fails because:
A) of the scarcity of resources.
B) of problems of inadequate demand and supply.
C) central planners rely on market forces.
D) of information and incentive problems.

Question

Quizplus · Accepted Answer

Central planning involves a centralized decision-making authority determining how resources will be allocated and how goods and services will be produced and distributed. This approach often fails due to information and incentive problems. Central planners do not have access to all the necessary information about consumer demand, production costs, and available resources, which can lead to inefficient allocation of resources. Additionally, since there is no competition or market pricing mechanism to guide decision-making, there is little incentive for planners to make optimal decisions. As a result, central planning often results in shortages, surpluses, and inefficiencies.

Central Planning Usually Fails Because