Which statement is characteristic of planned economies?

• A. Prices are determined solely by supply and demand in free markets.
• B. Private individuals own and control all resources.
• C. The government makes most production and allocation decisions.
• D. Economic activity is driven primarily by consumer preferences.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a planned economy: In a planned economy, the government plays a central role in making decisions about production and allocation of resources rather than relying on market forces.
2. Recall that in planned economies, prices are typically not determined by supply and demand in free markets, but are often set or controlled by the government.
3. Recognize that private ownership of resources is limited or absent in planned economies, as the government usually owns or controls the means of production.
4. Note that economic activity in planned economies is not primarily driven by consumer preferences, but by government plans and directives.
5. Conclude that the statement 'The government makes most production and allocation decisions' best characterizes planned economies.