ABSTRACT
When quantities are employed as planning instruments, the basic operating rules from the centre take the form of quotas, targets, or commands to produce a certain level of output. In an environment of complete knowledge and perfect certainty there is a formal identity between the use of prices and quantities as planning instruments. Many economists point with favour to the fact that if prices are the planning instrument then profit maximization automatically guarantees total output will be efficiently produced, as if this result were of any more than secondary interest unless the prices are optimal to begin with. The coefficient Δ is intended to be a measure of comparative or relative advantage only. The coefficient Δ is negative and large as either the benefit function is more sharply curved or the cost function is closer to being linear. The coefficient ρ is a measure of the correlation between marginal costs of separate production units.
