It is difficult for a central planner to determine optimal allocations of resources because:
A) of the simplicity of a modern economy.
B) of a potential lack of incentives among citizens who are asked to provide the central planner with accurate information.
C) of too many incentives governing the central planner.
D) the incentives exist to manipulate the resources to improve the allocations of resources.

Question

Quizplus · Accepted Answer

A central planner may not have access to all the information needed to make optimal resource allocation decisions. Citizens who provide information may not always provide accurate information because they lack incentives to do so. This lack of incentives could result in the planner making sub-optimal decisions. Additionally, the planner may be subject to too many incentives that could compromise their decision-making. Finally, the planner may be tempted to manipulate resources to improve their results.

It Is Difficult for a Central Planner to Determine Optimal