explain the conept industry,firm and plan
Answers
Economic planning is a resource allocation mechanism that is contrasted with the market mechanism. As a coordinating mechanism for socialist economics, economic planning substitutes factor markets and is defined as a direct allocation of resources. This is contrasted with the indirect allocation mechanism of a market economy. There are various types that economic planning procedures and forms planning can take.[1]
The level of centralization in decision-making in planning depends on the specific type of planning mechanism employed. As such, one can distinguish between centralized planning and decentralized planning.[2] An economy primarily based on central planning is referred to as a planned economy. In a centrally planned economy the allocation of resources is determined by a comprehensive plan of production which specifies output requirements.[3] Planning may also take the form of directive planning or indicative planning.
Most modern economies are mixed economies incorporating various degrees of markets and planning.
A distinction can be made between physical planning (as in pure socialism) and financial planning (as practiced by governments and private firms in capitalism). Physical planning involves economic planning and coordination conducted in terms of disaggregated physical units, whereas financial planning involves plans formulated in terms of financial units