Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 2 - The Market System and the Circular Flow - Questions - Page 44: 1

Answer

A market system copes with scarcity by allowing the producer to make decisions on allocation. A command system copes with scarcity by having the government make decisions on the allocation of scarce resources.

Work Step by Step

1) In a market system, the producer makes decisions as private individuals own most resources and markets coordinate economic activity. 2) In a command system, the government makes decisions on scarce resources as they own most resources and central planners coordinate most economic activity.
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