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Prices Vs Quantities.pdf

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Preview of Prices vs Quantities
🔗 Source: scholar.harvard.edu
📊 Size: 2.34 MB
📄 Pages: 15 pages
⬇️ Downloads: 300

Summary

The problem under consideration is how to regulate an isolated economic variable in a large economic organization. The question is whether to directly administer the activity or to fix transfer prices and rely on self-interested profit maximization. The use of quantities as planning instruments involves quotas, targets, or commands, while prices as instruments involve profit maximization at given parametric prices. Theoretically, there is no difference between the two modes of control, but economists tend to prefer indirect control by prices, while non-economists prefer direct regulation of quantities. The preference for prices is not supported by economic theory, and the use of prices does not necessarily economize on information.

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Description

The problem under consideration is how to regulate an isolated economic variable in a large economic organization.

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  • File Format: PDF
  • File Size: 2.34 MB
  • Pages: 15
  • Language: EN
  • Total Downloads: 300
  • Last Updated: 1 week ago

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