... as explained above, there is the planned market economy. There are several reasons that this system is unsustainable and therefore collapsed as it did. The main reason for which is the massive inefficiency that occur as a result of its implementation. This leads to wastage and therefore contradicts the basic economic problem of scarcity facing every economy. Scarcity as a definition is a population choosing between its needs and its wants, and in doing so making the most efficient usage of the scarce resources available. Inefficiency has two main forms Productive inefficiency and allocative inefficiency. Productive inefficiency is when firms in the economy do not produce at their lowest possible cost. The result of which is costs to the government, who are deciding and providing the necessary quantities of raw materials and labour needed to cover economic rent1, are higher. This leads to higher prices for the consumer ...

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