Question

What role does the law of supply and demand play in a command economy?

Answer 1

Answer:

The correct answer is - option A. The law of supply and demand does not apply because, in a command economy, the government controls the market.

Explanation:

Command economy does not follow the normal market economy rules including the law of demand and supply as here these two aspects or forces demand and supply do not determine what will be price, what would be the production of the goods and the services.

In this economy, government controls the prime aspects of the economy including the price of goods and services, how much the production of goods would be, and what would be produced more. It discourages the competition of the market by controlling the market completely.