Drag and drop each statement into the box with the economy it best reflects.
(2 points)
command economy
market economy
:: Business owners make decisions about how to run their companies.
The government decides how much of an item should be produced.
:: Legal policies are put into place that control prices.
Prices are set by supply and demand
Business owners make decisions about how to run their companies. (market economy)
The government decides how much of an item should be produced. (command economy)
Legal policies are put into place that control prices. (command economy)
Prices are set by supply and demand. (market economy)
Command Economy:
- The government decides how much of an item should be produced.
- Legal policies are put into place that control prices.
Market Economy:
- Business owners make decisions about how to run their companies.
- Prices are set by supply and demand.
To determine which economy each statement reflects, we need to understand the characteristics of a command economy and a market economy.
In a command economy:
- The government controls the means of production and resources.
- Decisions about how to run companies and determine production levels are made by the government.
- The government sets prices and determines how much of an item should be produced.
In a market economy:
- Private individuals or businesses own the means of production and resources.
- Business owners make decisions about how to run their companies.
- Prices are determined by the forces of supply and demand.
Let's consider each statement and match it with the corresponding economy:
Statement 1: Business owners make decisions about how to run their companies.
This statement reflects a market economy, as in a market economy, business owners have the autonomy to make decisions about how to operate their companies.
Statement 2: The government decides how much of an item should be produced.
This statement reflects a command economy, as in a command economy, the government controls production levels and determines how much of an item should be produced.
Statement 3: Legal policies are put into place that control prices.
This statement reflects a command economy, as in a command economy, the government sets and controls prices through legal policies.
Statement 4: Prices are set by supply and demand.
This statement reflects a market economy, as in a market economy, prices are determined by the interaction of supply and demand.
So, to summarize:
- Statement 1 reflects a market economy.
- Statements 2 and 3 reflect a command economy.
- Statement 4 reflects a market economy.