ECO 1104 Lecture Notes - Bain Capital, Invisible Hand, Indian Railways

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

Centralized economy: choices are made by individual producers, consumers. The central planning bureau sets output quotas for production units. (getting the government permission) The central planning bureau allocates the inputs and specifies the technique. The central planning bureau allocates the goods and services to workers via rationing. It is egalitarian ( )as it rewards all agents relatively equally. It is inefficient in that shortages and surpluses are common, and. Static as it does not adjust rapidly to changes in technology, consumer tastes, demography. (produce more of what the consumers want, and less of what they dislike) All orders to produce more of this and less of that have to go through a very long chain of command. Use economic models as our primary analytical tool for economic events and behaviour (the primary models are supply and demand models) Not designed to imitate reality with exactness, but rather to describe the workings of the economy and to make prediction.