Contrast how laissez-faire capitalism and the command system cope with economic scarcity.

Question

Social Studies

Patricia Lamb

9 November, 14:13

Contrast how laissez-faire capitalism and the command system cope with economic scarcity.

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Answers (1)

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Felicity Benitez · Answer 1

In laissez-faire economy, the price mechanism is the driving force to earn profits. In command or planned economy, the states' intervention is much and the wealth is distributed as per the decision of the state.

Explanation:

In a free market economy, the government's intervention is limited and the price mechanism determines the effort of the producers. An increase in the demand increases the production of the goods and services and price may as per the level of the demand. It protects the right and interest of the people. in a free market system, the value of money is protected.

In a command or a planned economy, the intervention of the state starts from the allocation of resources, it sets the production targets and the final income and wealth is distributed to the people as per the decision of the state policy.