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    Market and command economy

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    Compare and contrast how (a) a market system and (b) a command economy try to cope with economic scarcity.

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    Generally, economic resources are of four main types namely: land, labor, capital and entrepreneurial ability (McConnell & Brue, 2008, p. 11). Economic resources are also called factors of production or inputs in the productive process. As these names imply, economic resources are required to produce the outputs desired by society. Since certain outputs are desired, they command a price and so, therefore, do economic resources. This can lead to some things being economic resources in some circumstances but not in others. The way resources are distributed in market system and in command system differs significantly.

    A market system ...

    Solution Summary

    This solution compares and contrasts a market system with a command economy.