ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -In the other, socialism, the state owns the means of production, and state-owned enterprises seek to maximize social good rather than profits.

Detailed explanation-3: -In a command economy, the central government dictates the level of production of goods and controls their distribution and prices. Proponents of command economies argue government control rather than private enterprise can ensure the fair distribution of goods and services.

Detailed explanation-4: -Markets use prices as signals to allocate resources to their highest valued uses. Consumers will pay higher prices for goods and services that they value more highly. Producers will devote more resources to the production of goods and services that have higher prices, other things being equal.

Detailed explanation-5: -In a command economy, what goods and services are produced, how they are produced, and for whom they are produced are all questions answered by government planning. The government makes economic decisions for the good of society.