McConnell_Brue_Chapter02

McConnell_Brue_Chapter02

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Unformatted text preview: apter 2 31 Learning Objective 2-1 Slide 32 The Coordination Problem in Command Systems Central planners must coordinate (and attempt to anticipate) the millions of decisions that will be made by consumers, resource suppliers, and businesses. Since the outputs of many industries serve as inputs to others, the failure of any industry to meet its target (planning failure) causes a chain reaction of other missed targets in other industries. Chapter 2 Learning Objective 2-1 32 The coordination problem in command systems emanates from the fact that people are responsible for making coordination decisions. Anticipating all the future needs of a social system would be impossible for a group of individuals even in the event they were quite experienced in the command system planning process. There are literally millions of resources available to be combined in numerous different ways to provide finished goods and services. Invariably, planning participants will underestimate the need for some goods and services, and over-estimate the need for others. Secondarily, in economic systems an error in judgment in the...
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.

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