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Difficulty: EasyComparative Analysis and Evaluation of Economic Systems

When comparing economic systems, which of the following features primary reliance on government planning rather than the price mechanism to solve the basic economic problems of what, how, and for whom to produce?

  1. Command economyAnswer
  2. B
    Free market economy
  3. C
    Mixed economy
  4. D
    Traditional economy

Answer

The command economy relies primarily on central government planning to allocate resources and solve basic economic problems.
In a command economy, state planners directly guide production decisions and resource allocation, replacing price signals with centralized administrative control.

Step-by-Step Solution

1
Identify the primary allocation mechanism described in the stem
The mechanism relies on central state planning and administrative directives.
Economic systems are categorized by how they answer the fundamental economic questions.
2
Compare this mechanism across economic system models
Socialist or command economies use state planning boards, while market economies rely on consumer sovereignty and the price system.
Evaluating resource allocation mechanisms is essential for comparative analysis of economic systems.

Key Concept

Comparative analysis of allocation mechanisms in economic systems
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Topics

Comparative Analysis and Evaluation of Economic Systems

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