Economics and Social Studies

Question 1 • MA-US History II CR

What is the main difference between command and market economies?

Answer

In a command economy only, the government owns most of the businesses and means to make money.

In a market economy, the government decides the prices to make sure everyone has equal ability to pay for items; in a command economy, all items are provided.

A command economy is reflective of government regulation, while a market economy is reflective of what consumers want and need.

Competition only hurts the market economy as companies change prices and goods to meet consumer wants.

Explanation

In a command economy, the government makes many decisions about what is produced and how the economy operates. In a market economy, consumers’ choices and demand influence what businesses produce and sell. Therefore, the main difference is government direction versus consumer influence, as choice C states.

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