Question

In: Economics

- What role does command play in economic decision making and relationships, according to neoclassical economics?...

- What role does command play in economic decision making and relationships, according to neoclassical economics? What is the relationship between this position on command and the neoclassical view of contracts?

- What role does command play in economic decision making and relationships, according to political economy? What is the relationship between this position on command and the political economy view of contracts?

Solutions

Expert Solution

Neoclassical Economics: Neoclassical economics focus theory which forces the prodcution, pricing and consumption of goods and services. One of the main assumptions of neoclassical economics that utility to consumers is the very important factor in determining the value of a product.

Role of command play in economics decision making and relationships:-

When decision-making is cetralized, the government controls all the supply of sets all the demand. According to neo-classical economics command play very important role. In command economy industry owned and managed by the government. Government give little incentive to be efficient and proftitable. Government owned firms have less incentives to be efficient to the economy. But there are some shortcomings for command play like inefficiency beaurocratic, shortages, surpluses, less choice, less freedom.

Relationship between on command and the neo-classical view of contracts:-

Relationship between the command and the contracts according to the neo-classical view can be classified like this-

1. Contracts are controlled by owners and command is controlled by the government.

2. Government has little influence on contracts and full control over the control play.

3. Contracts give full chance to every producers, but control does not give this facility.

4. In contract income distribution is not similar but no control, income distribution is controlled.

Role of command play in economic decision making and relationships according to political economy.

Political economy:- It is the study of production and trade and their relations with law and custom and distribution of nation income.

Political economy rejects a narrow focus on “pure markets” in favour of broader view on economic equiry. Command play in economics decision making and relationship.


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