Free Market & Command Economies | A-Level Economics Notes
These revision notes cover everything you need to know about Shutdown Points for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.
What is a command economy?
A command economy is when the allocation of goods and services is determined using government intervention. It exists when the government controls what to produce, how to produce it, and who to distribute goods and services to.
What is a free-market economy?
A free-market economy is when the allocation of goods and services is determined by market forces e.g. supply and demand.
What are two advantages of a command economy?
Two advantages of a command economy and government intervention are:
- No risk of market failure e.g. externalities
- Goods and services are no longer allocated based on who is "willing and able" e.g. with housing, healthcare, education.
What are two advantages of a free-market economy?
Two advantages of a free-market economy and government intervention are:
- No risk of government failure
- Markets can respond quickly to changes and demand and supply
Summary questions
- What is a command economy?
- What is a free-market economy?
- What are two advantages of a command economy?
- What are two advantages of a free-market economy?
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