Answer to Question #173139 in Economics for aliah

Question

1. Imagine you have a friend from Russia, Katrina visiting Malaysia. You promise to take  her on a shopping excursion to Mid Valley shopping centre. 

Based on your knowledge of command / socialist economy, describe her experience (comparing Malaysia & Russia) when shopping here. 

You may use any of the criteria’s below to make your comparison:

i. Ownership of factors of production

ii. Incentives 

iii. Scarcity / choice 

iv. 3 basic economic questions – what, how, for whom to produce 

Answer 1

In command / socialist economy:

i. The government owns all factors of production,

ii. Command economy advantages include low levels of inequality and unemployment, and the common good replacing profit as the primary incentive of production.

iii. The government owns all the resources and makes choice on allocating the resources.

iv. 3 basic economic questions – what, how, for whom to produce are decided by the government.