Command Economic System- When the Government decides on what will be produced, where it will be produced, how it will be produced and how it will be distributed to the masses.
Examples: Certain examples include, North Korea, Russia, China and Cuba. These Countries take care of all economic decisions.
1. The availability of the production of goods or services.
2. The use of production to control the entire economy of the Country.
3. Easy Response to natural disaters and internal crisis.
4. Constant information about the demands of goods/ services from people.
1. Failure of Coordination.
2.Misinterpreated/ misplaced incentives.
Three Factors of Production:
1.What will be produced: The Government takes control of what should be produced. If the Government wants the increased production of televisions, then factories produced more televisions.
2.Who will it be produced for: The people decide on what to buy, based on what they need and what is being produced.
3.How will it be produced: The Government decides on what is the best way to produced the products that they want. They ultimatly want to maximize their profits for the production and selling of goods.