![]() are all distributed in the economy by the government as it deems efficient. All the economic plans related to manufacturing and distribution are developed by the state authority. The government decides the nature, types, quantity, and prices of the goods and services to be produced/ supplied in the market. Here the government plays a crucial role in regulating, planning, and governing goods and services produced in the country. The economic activity in the command economy works on the decision of the central authority. Some people try to practice a monopoly in order to make more money and break rules. The command economy also provides room for the black market in the economy.The government takes all the decisions related to the finances of the country such as wages to workers, assigning jobs to people.The government controls the pricing mechanism and regulates the price of goods and services.This economy has state-owned entities and privately players but both are controlled by the state.People in authority like politicians and bureaucrats give orders to all the stakes involved in the market such as buyers, sellers and investors.From raw material to finished products, the government has complete command over the resources. ![]() The government has absolute power over all the resources available in this economy.Mentioned below are key characteristics : Start Your Free Investment Banking CourseÄownload Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others Characteristics of Command Economy The consumers have an only direct choice regarding the already produced commodities. This decision can be influenced by the consumers indirectly if planners take into consideration the excess and shortage that gets developed due to this decision in the market. Once the decision is taken, the planners work out the distribution of goods to be produced and limitation of each enterprise on its production. This decision is taken care by ruling political authority. this economic system fixes in advance supply level rather than determining level of production required based on consumer demand. In a command economy, the proportion of total product used for investing is determined rather than the amount to be consumed i.e. Command economy is a form of economic system where the production/ supply, demand/ supply of goods and services, selling price, investment type and investment levels, all are regulated by the central governing authority by assigning production goals quantitatively and providing necessary raw materials required for manufacturing to production enterprises.
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