Why are consumers goods often in short supply in a command economy?

1 answer:

3 0

Answer: Command economy doesn’t rely on the laws of demand that operate in a market economy, hence consumer goods are often short in supply, as a result of poor planning, they often result to rationing. It is regraded as one of the major cons of a command economy. Lack of proper business planning from the central government and competition has leads to shortages and sometimes surpluses in the supply of goods and services.

Explanation: Command economy can also be referred to as planned economy. In a command economy all the factors of production is controlled by a central government. The central government decide the type of goods to be produced, type of services to be rendered and also the price.

The government dictates the economy, the amount of supply of a product and services irrespective of the demand.

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