ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In its purest form, a command economy answers the three economic questions by making allocation decisions centrally by the government.

Detailed explanation-2: -Command economy relies on government officials to answer the three basic economic questions. Officials called – central planners/ decide on what will be produced and made. Individuals have little or no say in economic choices. Command economies don’t exist.

Detailed explanation-3: -In a pure command economy, the basic economic questions are answered by the government, which owns the productive resources and handles distribution of goods and services.

Detailed explanation-4: -The command economy is a component of a communist political system, while a free market system exists in capitalist societies.

Detailed explanation-5: -A command economy is one in which a centralized government controls the means of production and determines output levels. Command economies stand in contrast to free-market economies, those in which the law of supply and demand determines output and prices.