what to produce?
- in a centrally planned economy, govt decides this.
- means govts control what goods + services individuals have access to
- in a market economy, individuals decide this through consumer demand
- businesses respond to this demand + produce that good/service
how much to produce?
- in centrally planned economy, govt decides this.
- govt limits production of certain goods + encourages production of others
- in a market economy, individuals decide this through consumer demand
- greater demand leads to greater production of that good/service
how to produce?
- in a centrally planned economy, govt decides this
- in a market economy, firms decide this
how to distribute?
- in a centrally planned economy, govt decides the distribution of income - usually equal
- in a market economy, those who play a greater role in the production process receive greater shares of income.
NB someone asked a very similar question about the role of govts in the australian economy, you may want to check that out in the economics section.
