Question

Describe three common problems that have often been faced by command economies. What kinds of issues have encouraged many countries to switch to mixed or market systems?

Answer 1

Responses will vary. A sample response follows: Historically, command economies in different countries have faced economic decline. Government controls have sometimes made change and innovation more difficult, as the economies suffer from reduced production. Because of this, consumers and citizens have had fewer choices and products available. Production issues have caused shortages, forcing governments to ration important goods. Each of these issues is related to a drop in production, and they have repeatedly encouraged command economies to change.

Step-by-step explanation:

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Answer 2

Common problems in a command economy include lack of the profit incentive, lack of competition and inefficiency. The profit motive lacks in a command economy hence there is no innovation. There is also inefficiency as the government determines what is produced as opposed to the market. May countries have switched to a mixed or market systems because the laws of demand and supply dictate what is produced leading to efficiency