While a free market economy is a market system whereby the pricing of goods and services is primarily determined by the sellers and buyers, and is hence based on demand and supply, a command economy is an economy whereby the market system is fully controlled by the government.
What are the advantages of being a consumer in a free enterprise economy?
It contributes to economic growth and transparency. It ensures competitive markets. Consumers’ voices are heard in that their decisions determine what products or services are in demand. Supply and demand create competition, which helps ensure that the best goods or services are provided to consumers at a lower price.
How does a free enterprise economy differ from a command economy?
Free enterprise economies allow individual supply and demand to set prices and production. Command economies have their economic production set by the decisions of a central government, and may also set the prices of goods for the consumer by the same methods.
How is the government involved in a command economy?
Command economy A command or planned economy occurs when the government controls all major aspects of the economy and economic production. In a command economy, it is the government that decides what to produce, how to produce goods and how to distribute goods and services within the economy.
What are the disadvantages of a command economy?
Disadvantages of command economies. Inefficient firms are protected and kept going; making it hard for resources to move to dynamic and efficient firms. Threat to democracy and liberty. A command economy creates a very powerful government which limits individuals rights to pursue economic objectives.
When does the government control the economic production?
A command or planned economy occurs when the government controls all major aspects of the economy and economic production.
