Command Economy
Concept 2
Examples: North Korea, Cuba, USSR and Soviet Russia
Definition: “A command economy is when government makes decisions, or a planned economy, is an economic system where the main economic decisions are taken by a central body; which is usually the government.”
Information:
The government of a command economy makes all major economic decisions, individual freedom is limited
Positives:
Could try to produce goods which benefit society and ensure everyone has access to basic necessities
What is produced can change quickly and drastically
Public health care, pensions, jobs available
The Government owns all businesses, so it decides the costs and whether or not people pay
Could prevent mass unemployment and prevent abuse of monopoly power
Negatives:
Government agencies usually have poor information about what to produce because their information is coming from people who may have no access to what is actually happening
No real emphasis on peoples’ wants or needs
Quality vs. quantity (they must meet a quota, so they cut corners and cheat)
Lots of bureaucracy (takes a very long time for anything to get accomplished)
Day-to-day problems can be tough (ex. inefficient distribution systems can lead to shortages and starvation)
Examples: North Korea, Cuba, USSR and Soviet Russia
Definition: “A command economy is when government makes decisions, or a planned economy, is an economic system where the main economic decisions are taken by a central body; which is usually the government.”
Information:
The government of a command economy makes all major economic decisions, individual freedom is limited
Positives:
Could try to produce goods which benefit society and ensure everyone has access to basic necessities
What is produced can change quickly and drastically
Public health care, pensions, jobs available
The Government owns all businesses, so it decides the costs and whether or not people pay
Could prevent mass unemployment and prevent abuse of monopoly power
Negatives:
Government agencies usually have poor information about what to produce because their information is coming from people who may have no access to what is actually happening
No real emphasis on peoples’ wants or needs
Quality vs. quantity (they must meet a quota, so they cut corners and cheat)
Lots of bureaucracy (takes a very long time for anything to get accomplished)
Day-to-day problems can be tough (ex. inefficient distribution systems can lead to shortages and starvation)
The government manages everything in a Command Economy. It controls all of the supply and sets all of the demand.