A market economy is an economic system in which the production and distribution of goods and services are guided by the interactions of supply and demand in a free market. In a market economy, prices are determined by the forces of supply and demand, and the government plays a minimal role in the allocation of resources.
In contrast, a command economy is an economic system in which the government plays a central role in the production and distribution of goods and services. In a command economy, the government makes all the economic decisions, including what to produce, how much to produce, and at what price to sell the goods and services.
One key difference between a market economy and a command economy is the role of competition. In a market economy, competition is encouraged, as it drives innovation, efficiency, and lower prices. In a command economy, competition is often suppressed, as the government controls the allocation of resources and sets prices.
Another difference is the role of property rights. In a market economy, individuals and businesses own private property and are able to use it for economic gain. In a command economy, the government owns the means of production and controls the allocation of resources.
A market economy is often associated with capitalism, while a command economy is often associated with socialism or communism. However, it is important to note that there is a wide range of economic systems that fall between these two extremes, and many countries have mixed economies that combine elements of both market and command economies.
In summary, the main difference between a market economy and a command economy is the role of the government in the production and distribution of goods and services. A market economy relies on the forces of supply and demand to guide economic decisions, while a command economy is centrally planned by the government.
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