What is the difference between a command economy and a market economy?
A) A command economy is found only in communist countries, while a market economy is found only in capitalist countries.
B) A command economy is more efficient than a market economy.
C) A market economy gives greater "life satisfaction" to people.
D) A command economy relies on centralized government control of the factors of production, while in a market economy supply and demand determine production and allocation decisions.
E) There really are no significant differences between a command economy and a market economy.

Question

Quizplus · Accepted Answer

A command economy is one in which the government controls the factors of production, determines what goods and services are produced, and controls their distribution. In contrast, a market economy is characterized by the operation of the laws of supply and demand, with little or no government intervention. Under a market economy, businesses are free to produce what they choose and set prices based on competitive forces. In summary, the primary difference between the two systems is the role of government in determining economic decisions.

What Is the Difference Between a Command Economy and a Market