Command Economy
A command economy is a system where the state owns resources and centrally plans production decisions through government directives. Individuals and firms have limited choice; the government decides what to produce, how to produce it, and who receives goods and services. Also called a planned economy.
Real World
North Korea's state planning committee sets production quotas for factories and allocates food rations to citizens, resulting in chronic shortages — in 2023 the UN estimated over 40% of the population was undernourished due to inefficient central allocation.
Exam Focus
Compare command economies to free markets using efficiency, equity, and consumer choice as evaluation criteria.
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