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1. What, and how much, to produce.

2. How to produce it.

3. For whom to produce it.

In a centrally controlled economy, the people being evaluated against the criteria for "success" are anxious to succeed. As a consequence, they are literal in their interpretation of the result criteria. if required to produce a number of ton of "crops," they grow turnips which are heavy, even if they do not meet consumer needs. If required to produce tractors, they ignore the fact that words like "usable", "working" or "functional" are missing from the instructions. They look "good" even if they are not delivering the implied results.

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11y ago
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10y ago

The market decisions are being made by a small amount of people at the head of the government, and the decisions tend to affect large portions of the market. So if the person in command of the economy makes a mistake, it will negatively affect the entire country

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In a command economy, there is continued tendency of authoritarianism, where there is mad rush for raising the GDP level to the maximum. Maximization of export without caring for the domestic market though helps for the time being, causes hardship to the local manufacturer and ultimate agony of the consumers. When the demand for exported product falls, the economic growth rates fall drastically, when attention is further driver to the domestic market. The case of Chinese economy is a fitting example in this regard.

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13y ago

1. What, and how much, to produce.

2. How to produce it.

3. For whom to produce it.

Answer:

In a centrally controlled economy the people being evaluated against the criteria for "success" are anxious to succeed. As a consequence they are literal in their interpretation of the result criteria. if required to produce a umber of tonnes of "crops" they row turnip s which are heavy even if they do not meet consumer needs. If required to produce tractors they ignore the fact that words like "usable", "working" or "functioal" are missing from the instructions. They look "good" even if they are not delivering the implied results

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12y ago

One problem that command economies cause is that the individual has little, if any, influence over how the basic economy functions. Supply and demand cannot set prices, the government does. Government may not know what is in demand currently, so products that not many citizens want will be produced. Then they will not be bought, making a lower GDP and per capita GDP.

The first sentence is the main point.

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10y ago

Poor Quality of work :)

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Q: What problems might a command economy face?
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