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Difficulty: MediumCommand Economy (Socialism)

In a socialist economic system, the central planning authority replaces the market price mechanism in deciding how land, capital, and labor resources are allocated across national industries.

Answer: Answer

Answer

The statement is True. A central planning authority replaces the free market price mechanism to allocate productive resources in a command socialist economy.
State control and public ownership enable central planning authorities to directly command where labor, capital, and raw materials are directed, eliminating reliance on the private price mechanism.

Step-by-Step Solution

1
Examine the primary allocation mechanism of a socialist command economy.
Socialist economies rely on state ownership of key resources and direct state coordination.
Identifying the ownership and governance structure clarifies how fundamental economic decisions are made.
2
Compare administrative central planning against market price signals.
Central planners set quotas and allocate inputs directly, overriding the autonomous price mechanism seen in market economies.
Substituting administrative directives for supply-and-demand market forces is the core operational feature of command socialism.

Key Concept

Role of Central Planning versus the Price Mechanism in Command Socialism
Estimated Time:1m 0s
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Topics

Command Economy (Socialism)

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