18

What effect does the lack of competition in command economies have?

A. very high prices

B. very low prices

OC. very high quality products

D. very low quality products

A and D

Explanation:

Lack of competition in command economies can have high prices and low product quality effects.

A command economy is one in which the government dictates what is produced, how they are produced, and how the final products are distributed within the economy.

This form of economy has merits and demerits. The merits include less inequality among workers in terms of income, controllable employment, and products can be tailored for the common goods of the economy.

Due to lack of competition, product innovations are usually not a priority, leading to the production of inferior goods. Low-quality products are sold to consumers at high prices in some cases.