Which of the following is NOT a characteristic of a command economic system?

• A. Production targets are set by the government
• B. Government owns most of the means of production
• C. Resource allocation is determined by central planners
• D. Prices are set by supply and demand in free markets

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the definition of a command economic system. In such a system, the government typically controls the means of production and makes decisions about resource allocation and production targets.
2. Step 2: Identify the characteristics of a command economy: production targets set by the government, government ownership of resources, and resource allocation determined by central planners.
3. Step 3: Recognize that in a command economy, prices are generally not determined by supply and demand but are instead set or controlled by the government.
4. Step 4: Compare the given options to these characteristics and note that 'Prices are set by supply and demand in free markets' contradicts the nature of a command economy.
5. Step 5: Conclude that the statement about prices being set by supply and demand in free markets is NOT a characteristic of a command economic system.