Question

The fundamental difference between a market economy and a command economy lies in which of the following?


Property rights and protection of private property


a

Absolute and comparative advantages


b

Specialization and trade


c

Taxes and subsidies


d

Positive and negative externalities

Answer 1

a

The core distinction is who owns and controls resources: market economies rely on private property rights and decentralized market signals, while command economies use public ownership and central planning. Other choices describe specific economic concepts or outcomes, not the fundamental institutional difference.