What defines a command economy?

A command economy is characterized primarily by centralized control, where the government makes all or most of the economic decisions regarding production, distribution, and consumption of goods and services. This means that instead of market forces determining what is produced and how resources are allocated, the state takes on the responsibility of setting these parameters.

In a command economy, the government may own the means of production and dictate prices, which contrasts sharply with other economic systems that rely on free market principles, where individual producers and consumers make decisions based on supply and demand. This structure allows the government to pursue specific economic goals, such as equitable distribution of resources or rapid industrialization, reflecting its priorities for the society.

The other choices reflect different economic systems. For instance, an economy with minimal government intervention describes a laissez-faire system, while voluntary market exchanges are indicative of a market economy. Traditional practices alone define a traditional economy, which relies on customs and agriculture rather than government control.