Suppose Resources Are Directed by Means of a Central Planner

question 212

Multiple Choice

Suppose resources are directed by means of a central planner who receives information on all the different uses of these resources. Why might sellers have an incentive to not provide truthful information to the central planner?

• A) Sellers want to be able to charge the minimum price for their product.
• B) In order to continue producing their product, sellers may overstate the importance of that product.
• C) The information system is too complex to provide correct information.
• D) They want resources to be able to travel to the highest-value uses possible.

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Definitions:

Debt to Equity

A financial metric that shows the comparative amount of debt and shareholders' equity utilized to fund a company's assets.

Financial Information

Reports and metrics detailing the economic status and performance of a company or individual.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the costs and expenses involved in making a product or providing a service.

Financial Information

Data regarding the financial operations, status, and health of an entity, including statements, transactions, and performance metrics.