What Is Command Economy


What is Command Economy? A command economy, also called a command economy, is a specific type of economic structure where the allocation of resources, production and investment decisions is made according to specific economic strategies and model portfolios. In a command economy, decisions are not made freely on the basis of market demand and profit, but are made in response to directives from top managers. This form of economy uses centrally-planned systems for allocation of resources and is sometimes referred to as command economy.

The planning principle of this model economy is sometimes referred to as central planning or central decision making. Central planning bodies, which may be public or private, issue policy decisions and determine the overall direction of the economy. This concept has been used in various social, political, and economic arenas. For example, centrally-planned economies are used in the operation of the airline industry and rail freight operations. In the real estate industry, buyers and sellers are able to work together because they can meet at a single location.

What is a market economy? A market economy operates on the process of competitive calculation. In a market economy, prices are established through competition and transactions take place on the market place. Prices are dynamic, changing according to the forces of demand and supply. In such an economy, the process of producing, marketing and trading is concentrated in a small number of places.

What is a manufacturing economy? In a manufacturing economy, resources are produced in great quantities that can be efficiently processed into output packages that satisfy customer demands. The process of production is intensive, and jobs are concentrated in a limited number of locations. In short, the economy produces goods that are able to be sold in a timely manner.

What is economic rent? Economic rent is the difference between what a seller pays for an item and what the buyer pays for the same item. Rent arises for the owner of land when he sells it to the builder who builds his home or workplace, or when a buyer purchases a building and occupies the property as rental property. In both cases, the seller and the buyer are subject to the laws of supply and demand. In a market economy, surplus production occurs because there are goods and services that have been produced beyond the needs of the owners.

What is political economy? Political economies occur in a country when the distribution of goods and services is based on the decisions of a central body, which usually governs a country or region. Examples of such bodies are the government, which determines the distribution of income, wealth, power, and material resources. Central banks also play a vital role in the market economy by regulating interest rates and other monetary instruments.

What is a market economy? A market economy is characterized by a marketplace where products are sold in the open market: there is no monopoly or set-up price. Prices fluctuate constantly due to demand and supply conditions. Market economies are characterized by a flexible market with little or no restrictions on the entry of new entrants. These markets allow for the freedom of competition, and are characterized by dynamic economic structures, entrepreneurial activity, and robust investment programs.

What is central economy? A centrally managed economy is one in which the entire economy is directed toward a common goal. The policies and actions of central bankers and other administrators set the course for the national economy. A centrally managed market economy is characterized by a stable financial system, efficient distribution of resources, and strong investment programs.