ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When a country’s central government decides the approximate production levels of different goods and also sets their prices, it is known as a command economy or planned economy.

Detailed explanation-2: -A command economy is an economic system in which the government, or the central planner, determines what goods and services should be produced, the supply that should be produced, and the price of goods and services.

Detailed explanation-3: -In a command economy, resources and businesses are owned by the government. The government decides what goods and services will be produced and what prices will be charged for them. The government decides what methods of production will be used and how much workers will be paid.

Detailed explanation-4: -A command economy, also known as a planned economy, is one in which the central government plans, organizes, and controls all economic activities to maximize social welfare. Command economies, as opposed to free-market economies, do not allow market forces like supply and demand to determine production or prices.

Detailed explanation-5: -In command economies, decisions about both allocation of resources and allocation of production and consumption are decided by the government.