Describe the Functioning of Planning Under Gosplan, the Central Planning

question 84

Essay

Describe the functioning of planning under Gosplan, the central planning agency in the former Soviet Union and the problems inherent in such a system

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Definitions:

Explicit Costs

Direct, out-of-pocket expenses incurred in conducting a business activity, such as wages, rent, and materials.

Economic Profits

Profits earned by a company after accounting for both explicit (direct) and implicit (opportunity) costs.

Marginal-Cost Curve

A graph that shows the relationship between the marginal cost of producing an additional unit and the total quantity of the product produced.

Law of Diminishing

A principle stating that as more units of a variable input are added to fixed inputs, the additional output from each new unit of input eventually decreases.