Question

Why is the economy under a communist system called a command economy?

Answer 1

Answer:

A command economy is a system where the government, rather than the free market, determines what goods should be produced, how much should be produced, and the price at which the goods are offered for sale. It also determines investments and incomes. The command economy is a key feature of any communist society. Cuba, North Korea, and the former Soviet Union are examples of countries that have command economies, while China maintained a command economy for decades before transitioning to a mixed economy that features both communistic and capitalistic elements.

Explanation:

A command economy is when government central planners own or control the means of production, and determine the distribution of output.

Command economies suffer from problems with poor incentives for planners, managers, and workers in state-owned enterprises.

Central planners in a command economy are unable to rationally determine the methods, quantities, proportions, location, and timing of economic activity across an economy without private property or the operation of supply and demand.

Proponents of command economies argue that they are better for achieving fair distribution and social welfare over private profit.

(i got it from investopedia)