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Difficulty: EasyCommand Economy (Socialism)

In a socialist command economy, consumer prices are primarily determined by the automatic forces of market demand and supply.

Answer: Answer

Answer

False. In a command (socialist) economy, prices are fixed by central planning authorities rather than determined by the free interaction of demand and supply.
The statement is false because a central planning bureau determines prices and resource allocation in a command economy, suppressing the automatic operation of market demand and supply.

Step-by-Step Solution

1
Identify the mechanism used for setting prices and allocating resources in a command economic system.
The central government or planning agency dictates production targets and fixes official retail prices.
Socialist command economies rely on state control to direct economic activities.
2
Assess whether market forces of supply and demand automatically set prices in command socialism.
The statement is False because automatic price determination through supply and demand is the key characteristic of a free market economy, not a command economy.
The market price mechanism is replaced by state administrative planning in a socialist economy.

Key Concept

Central Price Administration in Command Economies
Estimated Time:45s
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Topics

Command Economy (Socialism)

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