Which type of economy is best suited to a direct allocation of resources by the government?

• A. Command economy
• B. Traditional economy
• C. Market economy
• D. Mixed economy

Answer: (A)

Verified step by step guidance

1. Understand the concept of resource allocation in different economic systems: how resources like labor, capital, and land are distributed to produce goods and services.
2. Define a command economy: an economic system where the government centrally plans and directly controls the allocation of resources, production, and distribution decisions.
3. Compare the other types of economies: a traditional economy relies on customs and traditions, a market economy relies on supply and demand with minimal government intervention, and a mixed economy combines elements of both market and government control.
4. Recognize that direct allocation of resources by the government means the government makes all decisions about what to produce, how to produce, and for whom to produce, which aligns with the characteristics of a command economy.
5. Conclude that among the given options, the command economy is best suited for direct government allocation of resources because it is designed for centralized planning and control.