Understanding a Command System in Economics


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A command economy is:

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1. Which of these government administrators is behaving in a way that exemplifies the problem of moral hazard in a command economic system?

2. In a country with a command economy, people are angry because there are surpluses of snow shovels, overalls, and slow cookers, but shortages of toilet paper, canned food, and televisions. Which of the problems associated with command economic systems are they experiencing?

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About This Quiz & Worksheet

An economic structure that relies on a figure or a government's judgment to provide resources has had important use in world history, but has also come with a unique set of problems or pitfalls. This quiz will test your understanding of the details and issues faced in this kind of system economics.

Quiz & Worksheet Goals

This assessment can provide a gauge of your understanding by asking you to determine the term or phrase for:

  • An economy system where a government or central figure allocates resource
  • Incentive to maximize an individual's or group of individual's benefits over the benefit of others
  • A challenge related to the efficient allocation of goods

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information regarding the definition and processes of an economic system of centralized resource allocation
  • Interpreting information - verify that you can read and interpret the challenges of this particular system economy
  • Knowledge application - use your knowledge to answer questions about example economies throughout history

Additional Learning

For further study on this topic, review the lesson titled Understanding a Command System in Economics. This article goes into depth about command system economies including:

  • Definition and examples
  • Supply and demand
  • Coordination problems
  • Moral issues