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Consumer Behaviour

  • Date Submitted: 03/30/2010 11:14 AM
  • Flesch-Kincaid Score: 48.1 
  • Words: 738
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A command economy, also called planned economy, is directly controlled by the government. The state owns all property and controls all resources including land, labour, and capital in a command economy. Allocations of resources, supply, and price are regulated through central planning by command economy experts. The command economy discourages individualistic profit motives and consumerist needs. Under such a planned system, rewards, wages, and perks are disbursed based on the social value of the service performed. Certain sectors of the command economy get preferential allocation at the expense of others, which may lead to shortages in some essential goods. Absence of profit motives in a command economy precludes any need for competitiveness. This acts as a disincentive in individual contribution to collective efforts. Short-term advantages of a command economy contribute to its long-term failure. In the 20th century, the former Soviet Union was an example of a command economy. China and India used to also have a command economy. Today, countries using command economy are rare, remaining examples of countries with a command economy include Cuba and North Korea. For example, in the former USSR, state planners decided what was to be produced. They passed orders down to factories, allocating raw materials, workers, and other factors of production to them. Factories were then told how much they should produce with these resources and where they should be sent. If there was a shortage of goods in the shops, then goods would be rationed through queuing. Command economies have many advantages to it. One advantage is that equality is focused on. The government tries to eliminate all private property and distribute its good equally. If done correctly no one is in poverty and no one is wealthier than another. Social services are also emphasized in this type of economy. The government will provide equal health care, education opportunities, and make sure all people are fed....

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