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The use of Knowledge in Society
Knowledge can never be organized through markets. Knowledge of circumstances is of which we make in dispersed form. The most frequent source of knowledge is contradictory and incomplete possessed by different individuals. The societal problem associated with finances is therefore not on the allocation of specific resources. The central economic question is how to secure the best use of resources to members of the society (Hayek, 1945).
A critical signal used by individuals wants similar to the subjective values is the price which assists them in coordinating their plans. It is essential to contemplate action of the price system to see what it can accomplish. A perfect example is a scenario where an opportunity arises, which utilizes tin as a raw material and one of the sources that supply tin is removed. It does not matter which causes made the tin scarcer (Hayek, 1945).What tin users’ needs to know is that the tin they consumed is employed somewhere more profitably, and as a result, they must economize the tin. The price system plays a crucial role in communicating information, and this enables us understands its real function.
The main problem arises in choosing the best way of using knowledge which is initially dispersed among people. It creates a challenge in creating an efficient economic system. The answer to this question is the question that arises of who is supposed to do the e…
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