Explain what determines the allocation of resources and distribution of goods in a market economy versus a planned economy

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Social Studies

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31 July, 12:10

Explain what determines the allocation of resources and distribution of goods in a market economy versus a planned economy

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Vanessa Farrell · Answer 1

In a market economy, the allocation of resources and distribution of goods is determined primarily through supply and demand, whereas in a planned economy, the government makes decisions on how much of each good will be produced based on guesswork, which oftentimes fails to be correct.