In summary command economic systems cannot change

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Unformatted text preview: conomic systems cannot change quickly. Chapter 2 Learning Objective 2-1 7 Command systems are notoriously inefficient. Central planners historically choose for the system to produce too much of certain goods, not enough of others, and have no incentives built into the process for change. • Accurately predicting future needs for even small groups of people is difficult because we can’t anticipate needs in the future and how those needs may change over time. • In addition to the prediction quandary, consider the notion that change would require not only convening a planning committee, but also gaining consensus among its members. • When we consider having to go to such extremes in order to accommodate changes, one can understand why this system does not function very efficiently. 3 Chapter 2: The Market System and The Circular Flow Slide 8 In contrast, the market system allows private ownership of resources and defers production and distribution issues to the self-sustaining process of prices in the market. The Market Syst...
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