In which way does a planning system function?

Question

Quizplus · Accepted Answer

In a planning system, a central authority decides what to produce and how to allocate resources to production. This can be seen in planned economies where the government controls the means of production and decides on the distribution of goods and services. It is different from a market-based system where prices and quantities are determined by the forces of supply and demand, or a laissez-faire system where businesses make their own decisions without government intervention. Option C (Government owns and makes everything) is also incorrect as it suggests a command economy where all resources are owned and controlled by the government. Option D (Businessmen plan their economic strategy and carry out their plans to the best of their ability) is a description of a market-based system where firms compete against each other and consumers determine the success of businesses through their buying decisions.

In Which Way Does a Planning System Function