Advantages & Disadvantages of Command Economies


	Advantages & Disadvantages of Command Economies
	Advantages Co-operation between firms can lead to high levels of output There is a reduction in inequality compared to free market economies. The government may limit the external costs from production and consumption. The government can fund the provision of public goods Less unemployment and inflation	Disadvantages The price mechanism is unable to operate so markets may suffer from shortages and surpluses leading to inefficient allocation of resources Lack of competition leads to [poor quality goods There is less choice of goods and services for consumers to select from. A lack of financial incentives: managers have no profit incentives to take risks Economic growth and living standards tend to grow at a much slower rates.
	Evaluation

The price mechanism is unable to operate so markets may suffer from shortages and surpluses leading to inefficient allocation of resources
Lack of competition leads to [poor quality goods
There is less choice of goods and services for consumers to select from.
A lack of financial incentives: managers have no profit incentives to take risks
Economic growth and living standards tend to grow at a much slower rates.

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