Resource Allocation Under Free Market Economies Is More Efficient Than Command Economies

Resources allocation under free market economies is more efficient than command economies.

Nowadays, resource allocation in both command and free market economies is a widely discussed the basic economic essay. It ties in which means what is produced, how and for whom. Free market economy is where resources are allocation by consumers and producters and command economy is controlled by government. The main advantages and disadvantages of recourse allocation in command and free market economies will be discussed in this essay.

To begin with,recources allocation in command economies is fairer than in free market but not necessarily efficient. Cuba, North Korea, China, Russia and Iran are current examples of economies that are closest to perfect command economies. An economy that is planned and controlled by a centre administration, as in the former Soviet Union is a perfect example of command economy.

Free market economies operate through the price mechanism. It is based upon transactions without government invilvement. In the real word,transactions usually involve some government guidelines. An example of this would be buying a BigMac in the US or UK where a government controls certain health standards, imposition of a tax and as little input over competition as required by law. But in a free market economy, there would be no laws against creating a monopoly.

However, problems also related to command and free market economies. In command economies, there are three major problems. First, the government plans do not necessarily reflect the goals of the consumers--only their own. Second, recources are not used productively. Sometimes, command economies have been criticized because they tend to be badly organized, lack quality-control and possibly worker incentives, resulting in responsibility for severe environmental degradation. Third, lack of choice, poor allocation of recources,