It is one in which a centralized government controls the means of production and determines output levels.

1. Pure Command Economy
Group 2 Presentation

2. Command Economy
The government or a central authority (like a
dictator) owns or controls the factors of
production and makes the basic economic
decisions.
The government is usually in charge every
sector transportation, communication,
banking, and manufacturing.
The government usually sets wages (how
much people earn at their job) and decides
who will work at which job.

3. Command Economy
The government makes all economic decisions
for the country or society.
The only goods and services available to the
people are based on what the government says
they can have.
Consumers have little or no power
in deciding what will be available
for purchase.

4. The Advantages of a Command
Economy
 Less Inequality : Because the government controls the means of
production in a command economy, it determines who works where
and for how much pay.
 Low Unemployment Levels : a command economy government
can set wages and job openings to create the unemployment rate
and wage distribution that it sees fit.
 Common Good vs. Profit Priority: A command economy
government, can tailor products and services to benefit the common
good without regard to profits and losses.
 Operations are consistent within a command economy: Their
structures are dictated by the government, so there is consistency
within the operational structures of each business.

5. The Advantages of a Command
Economy (contd)
 It creates a flexible industrial sector: Industries are directly operated
or controlled by the government, so their resources can be applied to
whatever project needs to be completed. This creates a flexibility within
the industrial sector that other economy formats cannot match.
 Acute demands can be quickly met: Within a command economy, the
full resources of the government can become active at any given time. If
an emergency occurs, such as a natural disaster, then it becomes
possible to meet the general needs of the population with a greater
speed than in other economy structures.
 Any resource can work with any other resource: In a command
economy, any resource can be dictated to work with any other resource.
This makes it easier to produce products on a larger scale because all
resources, not just individualized business resources, are actively
working to benefit society.

6. The Disadvantages of a Command
Economy
 Lack of Competition Inhibits Innovation: the inherent
lack of competition in command economies hinders
innovation. Hence, many advancements in medicine and
technology have come from countries with free-market
economies, such as the United States and Japan.
 Inefficiency: Production in command economies is
notoriously inefficient as the government feels no pressure
from competitors or price-conscious consumers to cut costs
or streamline operations. They also may be slower to
respond—or are even completely non-responsive—to
consumer needs or changing tastes.
 It is a governmental structure which reduces personal
freedoms.
 It encourages illegal activities.
 It reduces exports.

7. What are the potential benefits of moving
from a command economy to a market-
based system?
The benefits include higher quality goods, better
pricing, efficient allocation of resources, the ability to
produce and sell what you want, and rewards for
taking risks in the form of profits.

8. Command Economy Countries 2021
 Belarus.
 Cuba.
 Iran.
 Libya.
 North Korea.
 Russia.

9. I can say thank you and you can ask questions
only if the government allows us.