Scientific Knowledge Vs Cost Center Essay

Scientific knowledge is the knowledge one obtains through education, it is easy to communicate and hence not specific to anyone. On the other hand, knowledge of the particular circumstances of times and places is the particular information an individual possesses, which he obtained through particular experiences that happened in a specific way to him and him alone.

An economic order could be based solely on scientific knowledge if we could succeed in putting at the disposal of a single central authority all the knowledge which ought to be used but which is initially dispersed among many different individuals, that is if the economy did not change at a constant rate, if economic plans could be laid down for fairly long periods in advance

Cost Centers are focused in encouraging managers on increasing the efficiency of their service without being affected by shifts in demand. Its main advantage is that this type of center is very helpful to reach an optimal quantity or to reduce the prices as low as possible to generate a high profit. Some drawbacks of this system are that there is a high level of uncertainty about optimal quantity and standard costs, another potential problem with cost centers is that a cost center manager has incentives to reduce quality below the optimal level.

In an Expense center, the manager has incentives to produce as much as possible and the total value of the center to the rest of the community rises as the quality of the output rises, hence the budget given by the community ( the State in this case) increases with increases in the promised level of output. The advantages of this center is that the manager has a budget he cannot overpass and hence no incentive to go higher than that. On the other hand there are incentives for the manager to not provide the best outcome possible with the budget provided in order to obtain a higher budget by promising better outcomes with that new