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06.12.03 Outline the positive and negative features of the command economy The essential economic problem is limited resources, such as land, labour, capital and enterprise, in relation to unlimited wants. Because of this, people need to answer the three basic economic questions: what to produce, how to produce and for whom to produce. Therefore there is a need for effective resource allocation with effective answers or rather methods of organizing the production, distribution, exchange, sharing goods and services. Allocation of scarce resources is organized through several different economic systems. The idea of the command economy is to answer the three basic economic questions completely by the government (not by the market forces) and that means also that all factors of production are owned by the government. It is based upon the Karl Marx's (1818-1883) theory that all people are equally. This way of answering the questions is not perfect and hence contain...

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