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A principal feature of a command economy is that __________. a. production decisions are made by profit-maximizing firms. b. there is a central planning board at the top, which transmits economic decisions down to the various producing and consuming units below. c. consumers are allowed to determine that is produced based on their demand for goods and services. d. regulatory agencies constrain the most egregious forms of market power in a market system of allocation.

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Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

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BuyFindarrow_forward

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 29, Problem 14SQ
Textbook Problem
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A principal feature of a command economy is that __________.

  1. a. production decisions are made by profit-maximizing firms.
  2. b. there is a central planning board at the top, which transmits economic decisions down to the various producing and consuming units below.
  3. c. consumers are allowed to determine that is produced based on their demand for goods and services.
  4. d. regulatory agencies constrain the most egregious forms of market power in a market system of allocation.

To determine

The principle feature of a command-based economic system.

Explanation of Solution

An economic system is an organization that determines the basic answers to the economic questions such as what to produce, how to produce, for whom to produce, and so on. Thus, the economic system is the organization such as the capital economy, command economy, mixed economy, and so on.

Option (b):

The economic system determines the answers for the central economic problems or questions such as what to produce, how to produce, and for whom to produce. Under the command economy, it is done by the central government. This means that there will be a strong central government that owns the economic resources and makes the decisions regarding the production and allocation of the lower units. This is the principle feature of the command-based economy. Therefore, option 'b' is correct.

Option (a):

The economic system in which the economic decisions are taken by the central government is known as the command-=based economy. The government identifies the needs of the economy and carries on the production decisions that are not profit motivated. Thus, under the command-based economy, the production decisions are taken by the central government and not by the profit maximizing firms...

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