Podcast
Questions and Answers
What is a result of the price mechanism being unable to operate?
What is a result of the price mechanism being unable to operate?
What is the impact of a lack of competition in a command economy?
What is the impact of a lack of competition in a command economy?
Inefficiency and low productivity
In a command economy, there is an abundance of choice for products and jobs.
In a command economy, there is an abundance of choice for products and jobs.
False
Lack of financial incentive occurs because wages are _____ and there is no incentive to work hard.
Lack of financial incentive occurs because wages are _____ and there is no incentive to work hard.
Signup and view all the answers
Why do command economies tend to underperform?
Why do command economies tend to underperform?
Signup and view all the answers
Study Notes
Disadvantages of a Command Economy
- The price mechanism's dysfunction leads to misallocation of resources, creating issues such as shortages and excess supply.
- A lack of competition in command economies results in inefficiency and lower productivity levels, reducing overall economic performance.
- Workers face limited choices regarding available products and employment options, which can lead to dissatisfaction and reduced motivation.
- Fixed wages diminish financial incentives; without the potential for increased earnings, individuals may lack motivation to work diligently or innovate.
- Command economies typically experience slower economic growth and lower living standards; this stagnation contributed significantly to the collapse of the Soviet Union in the 1990s.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore the drawbacks of a command economy in this quiz. Learn about the inefficiencies, lack of competition, and the impact on worker motivation and economic growth. Assess the critical aspects that led to the collapse of command economies like that of the Soviet Union.
