Which of the following is a characteristic of a command economy?

• A. Resources are allocated through decentralized markets
• B. The government makes all major economic decisions
• C. Private ownership of resources is widespread
• D. Prices are determined solely by supply and demand

Answer: (B)

Verified step by step guidance

1. Understand the definition of a command economy: it is an economic system where the government centrally plans and controls the allocation of resources and production decisions.
2. Identify the role of the government in a command economy, which typically involves making all major economic decisions rather than relying on individual market participants.
3. Recognize that in a command economy, private ownership of resources is limited or nonexistent because the government owns or controls most resources.
4. Note that prices in a command economy are usually set by the government rather than being determined solely by supply and demand forces in decentralized markets.
5. Compare each option to these characteristics to determine which one correctly describes a command economy: the correct characteristic is that the government makes all major economic decisions.