Command Economy
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Under this system, planning committees are appointed and they provide the answers to the three basic economic questions
A most important feature of command economies is the public ownership of all means of production. The land and all types of capital are owned by the state. Private ownership is usually limited to personal possessions, although small businesses are sometimes privately owned and farm workers are often allowed to own small plots of land and to sell their produce in local markets.
Production is carried out according to a national plan which sets production targets for the different industries. Resources are allocated to industries by government directives. Resources are directed to different uses by the government.
Prices are not free to change in response to changes in demand and supply; they are fixed by the government. A shortage will often mean that some form of physical rationing has to used.
In this type of economy producers do not produce for profit; they produce what the government thinks will be in the best interest of the people. Enterprises are not privately owned and there are no shareholders.
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by: Admin
Total views: 913
Word Count: 339
Date: Sun, 21 May 2006 Time: 12:00 AM
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