Question

5) What prompted Von Misses to develop the Economic Calculation Problem and The Knowledge Problem.

Answer 1

The economic calculation problem and the knowledge problem as proposed by Ludwig Von Mises critices the usage of economic planning instead of using market based information in allocating the factors of production.

The reason he proposed his theory was that he considered that the economic planning always leads to an irrational and inefficient allocation of resources. Market based information is based on the real time facts of demand and supply of the products which provide a more correct information on how to allocate the resources more optimally.