Command and free market economies

Question 1

Why free market economies are good

Answer 1

• Allocative efficiency (goods people actually demand can be supplied)
• quality of products
• consumer choice
• shortages and surpluses in demand economies
• people in the Soviet Union were gives weight guide instead of quantity guide so they became lazy
• lack of incentives in demand economies

Question 2

Why command economies are good

Answer 2

• cooperation between firms
• reduction in inequality (much less than free market economies)
• the government may limit negative externalities
• insufficient public goods in FM economies
• erratic swings in FM economies