Which statement does NOT describe a command economy?

Which statement does NOT describe a command economy?

• A. The government controls prices and production
• B. Private ownership is limited
• C. Prices are determined by supply and demand
• D. Central planning guides resource allocation

Answer: (C)

In a command economy, central planners decide what to produce, how much to produce, and at what prices, with government sets prices to meet planned goals. Prices are not driven by buyers and sellers bargaining in markets. That makes a statement that prices are determined by supply and demand inconsistent with a command economy, because it reflects how prices work in market-based systems. The other statements align with command-economy features: the government controls prices and production, private ownership is limited, and central planning guides resource allocation. The key idea to notice is who sets prices—planners in a command economy versus markets in a market economy.

In a command economy, central planners decide what to produce, how much to produce, and at what prices, with government sets prices to meet planned goals. Prices are not driven by buyers and sellers bargaining in markets. That makes a statement that prices are determined by supply and demand inconsistent with a command economy, because it reflects how prices work in market-based systems.

The other statements align with command-economy features: the government controls prices and production, private ownership is limited, and central planning guides resource allocation. The key idea to notice is who sets prices—planners in a command economy versus markets in a market economy.