Question

In a planned economy, prices of commodities are controlled by _________.
A.
Supply and demand
B.
Producers and consumers
C.
The government
D.
Private enterprises


Please select the best answer from the choices provided

Answer 1

Answer:

C. The government

Explanation:

Vocabulary

First, it is important to define the key terms in the question and answers.

• Planned Economy- A planned economy is an economy where the investments and capital are allocated by the government.
• Commodities - Commodities are economic goods that have real value due to their real-life usefulness (like lumber) or rarity (like gold).

How Planned Economies Work

As its name suggests, a planned economy plans the economy out and the price of goods within the markets. These plans are created by the government. This means that private businesses, consumers, and supply/demand do not control prices. Only the government can do that because the government has full control of planned economies. This is the reason that planned economies are also called command economies because the economy is commanded by the government.