Micro Economics Report Essay Example | Topics and Well Written Essays - 2000 words

Micro Economics Report - Essay Example It can be said that the economic problem necessarily follows from the valuation of goods bought by the consumers. It again can be argued that the valuation of the consumers goods do not depend solely on the factors of production but also on the supply conditions of the factors of production. The problem cannot be solved is it can be shown that the knowledge were accrued only to a single mind. Instead economists need to show how interaction between persons who possess partial knowledge can lead to a solution. If it is assumed that all knowledge is given of a single mind then all important and significant things on the real world are disregarded. The explanation of the article Analysis made by Professor Schumpeter suggests that there are some problems with the approach used by some researchers which disregards some of the crucial phenomenon with which people have to deal with like unavoidable imperfection in common man’s knowledge as well as consequent requirements for a process by which knowledge is constantly communicated and acquired. It cannot be denied that the equilibrium analysis has some useful function which it can perform. The problem with which the author of the journal wants to deal with is of rational economic organization. Many of the points that the author has tried to discuss in the article revolves around the diverse paths of reasoning that have emerged unexpectedly. The author is of the opinion that that there exists current disputes between economic theory and economic policy. The dispute arises from the misconception about the nature of economic problem that accrues to the society. The reason for the emergence of misconception is the error prone transfer of the habits of thought to social phenomena that were developed with the view to deal with the phenomena of nature. The allocation of the available resources is regarded by the word planning. The economic activities can be treated to be as planning as in any society where many people c ollaborate it will be based upon knowledge which through some means must be conveyed to the planner. The crucial problem in explaining the economic process for any theory is the various means of communication on which people base their plans. The design of an efficient economic system is the finest method of utilizing the knowledge originally dispersed amongst all people. Hayek questions the argument of how to solve the rational economic order. The author began the article by wondering the possible ways of constructing an economic order. A problem would not arise if there is full transparency and information in the economy. But the author notes that there is no full transparency and information within the society. It is impossible to correctly justify the desires of the neighbours. The problem stated in the article is utilization of knowledge that is partially accrued by persons and they are devoid of gaining the full knowledge. All forms of economic activity which can either be dec entralized or centralized involve the term planning. According to Hayek, the system that will lead to optimum utilization of the available knowledge will depend on the expected situation where the knowledge is to be applied. Choosing the right expert is a complicated problem if someone is looking for the experts who might have the capability to use the knowledge. However Hayek