What is the difference between a market economy and a command economy?

Answer 1

An economy may be defined as the state of a country or region in terms of the production and consumption of goods and services, and the supply of money.

A market economy (also called a free market economy, free enterprise economy) is an economic system in which the production and distribution of goods and services takes place through the mechanism of free markets guided by a free price system .

On the other hand, a command economy (also known as planned economy) is an economic system in which the state or government controls the factors of production and makes all decisions about their use and about the distribution of income

Answer 2

A market economy allows the market to efficiently allocate goods in the economy using price as a communicator and a signal sender, this way a firm knows how much to produce based on consumer's demand at each particular price.

A command economy, however is inefficient in their allocation of goods, because they set the quantities, without regarding people's demands or producer's ability to supply, simply because they don't have the information that a market economy communicates using prices.

A command economy sets in the beginning and can not change their allocations until the next period, a market economy is more adaptable and generally brings about a higher consumer and producer surplus.

Answer 3

A market economy is a free price system set by supply and demand, a command economy is controlled by a central administration

Answer 4

nobody knows it jsut one day popped up in a newspaper