In a Command Economy, whom dictates the quantity supplied and prices paid?

In a Command Economy, whom dictates the quantity supplied and prices paid?

• A. Government Dictates the Quantity Supplied and Prices Paid
• B. Prices Set by Consumers
• C. No Government Involvement
• D. Market Determines Prices

Answer: (A)

In a command economy, the government controls production decisions and price levels through central planning. The planners decide how much of each good should be produced and set the prices producers will receive and consumers will pay, rather than letting buyers and sellers interact through supply and demand. This direct government control is what characterizes a command economy. Prices set by consumers or by markets would imply market forces at work, which is the opposite of a command system. No government involvement also contradicts the defining feature, since the state is the central planner in this setup.

In a command economy, the government controls production decisions and price levels through central planning. The planners decide how much of each good should be produced and set the prices producers will receive and consumers will pay, rather than letting buyers and sellers interact through supply and demand. This direct government control is what characterizes a command economy.

Prices set by consumers or by markets would imply market forces at work, which is the opposite of a command system. No government involvement also contradicts the defining feature, since the state is the central planner in this setup.