Final answer:
Free markets solve the coordination problem through the mechanism of prices, while command economies struggle because decisions are made by a central authority without the price mechanism.
Step-by-step explanation:
Free markets solve the problem of coordination by allowing prices to signal supply and demand, which leads to the production of goods and services that consumers want. In a free market, producers respond to consumer demand by increasing the production of goods that are in high demand and decreasing the production of goods that are in low demand. This coordination is achieved through the mechanism of prices, which adjusts based on the forces of supply and demand.
On the other hand, command economies struggle with the problem of coordination because decisions about production, consumption, and resource allocation are made by a central authority, rather than through the interactions of buyers and sellers in the market. This central planning often leads to inefficiencies and misallocation of resources, as the central authority may not have perfect information about consumer preferences or the ability to respond quickly to changes in demand. Furthermore, without the price mechanism to guide production decisions, command economies may produce goods that are not in high demand, leading to surpluses or shortages.