The incentive problem under communist central planning refers to the idea that
A) planners had to direct required inputs to each enterprise.
B) workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products.
C) the immediate effect of more investment was less consumption.
D) exports had to be equal to imports for a central plan to work.

Question

Quizplus · Accepted Answer

In communist central planning, the incentive problem arises because workers, managers, and entrepreneurs cannot personally benefit from responding to shortages or surpluses, or by introducing new and improved products. This lack of incentive can lead to inefficiencies and low productivity as individuals do not have the motivation to work harder or innovate. Planners directed required inputs to each enterprise, but the lack of incentives made it difficult for the system to operate efficiently. The other choices (A, C, and D) are related to central planning, but do not specifically address the incentive problem.

The Incentive Problem Under Communist Central Planning Refers to the Idea