Answer to Question #232143 in Economics for CCW

Question

Command Economic System:

Read the paragraph + answer questions below

1. Who controls the factors of production?
2. Describe the system, use vocab words
3. Where might you find this system in the world today?

Link: https://drive.google.com/file/d/1gwZ1UvE5_j-y_1TFNU4c7guuv8CbcRj5/view?usp=drivesdk

Answer 1

The command (planned) economy is an economic system where the state takes over the regulatory functions. It decides what types of products, in what quantities, how, and for whom to produce. The state is assigned the role of the main regulator in the sphere of the economy since this economic system is characterized by the predominance of state ownership of basic production assets. In other words, the bulk of the resources is considered the property of the country's population.

Since there is little or no private ownership of the means of production, there is no market in a command economy. It is being replaced by central planning, distribution, and procurement. At the same time, there is a presence of market elements. Manufactured products are goods, the price of which is set by the state. There is a network of trade organizations that act as an intermediary between the seller (state or cooperative enterprise) and the buyer (enterprise, institution, population).

The former Soviet Union, Cuba, China, North Korea, and a number of other states are examples of states whose economies are based on an economic command structure.