How is the allocation of goods and services production determined in a command economy?

Question

Businesses decide what to produce on the basis of market conditions.
Consumers decide through their behavior in the marketplace.
Central government planning decides what will be produced.
Supply and demand control production and price.

Answer 1

In a command economy, the allocation of goods and services production is determined by central government planning. Central authorities and government officials decide what goods and services will be produced, how much will be produced, and who will receive them. This planning is often guided by national economic goals and priorities rather than market conditions or consumer demand.

In contrast to market economies, where businesses determine production based on market conditions, command economies prioritize government control and direction of economic activities. The government plans and coordinates production across various sectors of the economy, such as agriculture, manufacturing, and services, in order to meet the needs of the society as determined by the government.

Under a command economy, supply and demand do not directly control production and prices as they do in market economies. Instead, government planners set production targets and prices for goods and services, taking into account the overall needs of the society and its priorities. This centralized planning system aims to ensure equitable distribution of resources and goods among the population, although it may not always efficiently respond to individual preferences or changing market conditions.