In a Command Economy the selection of goods is limited. Image credit huffingtonpost.com

In a Command Economy the selection of goods is limited. Image credit huffingtonpost.com

ZIMSEC O Level Business Studies Notes: Command Economy/ Planned Economy

Characteristics/Features

• The government owns and manages all the resources.
• The government determines what to produce, how much to produce and for whom to produce.
• The main motive is to provide goods and services rather than profit.
• The government sets the prices
• Examples include Cuba, China and North Korea

Advantages

  • Prices are kept in control.
  • Equitable distribution of wealth.
  • Low levels of unemployment as government provides employment for everyone.
  • Elimination of wastage as there is no duplication.
  • Provides essential goods.

Disadvantages

• Consumers cannot choose what to buy since there is usually only one brand.
• Takes time to respond to changes in consumer needs and wants.
• Lack of profit motive may lead to inefficiency.

To access more topics go to the Business Studies Notes page.