Planned Economy and its advantages/disadvantages
Planned economy
- State ownership and control
- Consumer preferences is unimportant
- State decides what to produce
- E.g. Cuba, North Korea
- State ownership, control over economic resources
Advantages:
- Central planning prevents duplication and competition
- Production based on needs not consumer spending patterns
- Long term planning
Disadvantages
- No consumer choice
- No competition to improve product design and keep prices low.
- No motivation
- Slow decision making
