Question

A characteristic of centrally planned economies is that:

A. there are many incentives for innovation and hard work.
B. the price is relatively unimportant in allocating resources.
C. profits are the main measure of success of a firm.
D. entrepreneurship is quite prevalent and highly rewarded.

Answer 1

The correct answer is letter "B": the price is relatively unimportant in allocating resources.

Step-by-step explanation:

Centrally planned economies or command economies are those managed by the government that dictates production quotas and distribution levels and determines prices. Private ownership is null in centrally planned economies since the government is the owner and distributor of land, labor, and capital.

Allocation price is irrelevant when it comes to command economies since only those vital goods such as staples are paid attention.