Which is true of an economy which operates entirely through central planning?
A) Individual economic incentive is reduced by the absence of the profit motive
B) There is relative ease in matching resource allocation to consumer demand
C) Central planners receive market information through the price mechanism
D) The system adapts easily to technological change

Question

Quizplus · Accepted Answer

In a centrally planned economy, there is no profit motive, which reduces the individual economic incentive for innovation and productivity.

Answer: B
 Central planning allows for more precise allocation of resources based on predetermined goals, but it may not always match consumer demand or changes in preferences.

Answer: C
 In a centrally planned economy, central planners make decisions about resource allocation, often without relying on price signals or market information.

Answer: D
 The absence of competition and market forces in a centrally planned economy may hinder the adoption of new technology or innovations.

Which Is True of an Economy Which Operates Entirely Through