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Free Market Vs Command Economy

Explain the main differences between a command economy and a free market economy.

An economy may be defined as the state of a country or region in terms of the production and consumption of goods and services, and the supply of money.

A planned economy is an economic system in which economic decisions are made by centralized planners, who determine what sorts of goods and services to produce, how they are to be priced, and allocated. Since most known planned economies rely on plans implemented by the way of command, they have become widely known as command economies. These are generally associated with socialist or communist economic systems.

A free market economy is an economy in which the allocation for resources is determined only by their supply and the demand for them.
Every economic system is based on a different philosophical stand than the others. These differences are caused by the different responses that each economy has to the problem of scarcity. However, economies don’t always work as their theoretical models and take some components from each system to develop an economy that works. Thus, economies are graded as being free market economies or planned economies using a tool called the economic spectrum, where the planned economies are placed on the left and the free market economies on the right.
Below is the spectrum along with the different names that each economy may be known as.

Centrally Planned
Mixed Economy
Free Market Economy ...

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