Texas A&M University (TAMU) ECON202 Principles of Economics Practice Exam 1

In a command economy, the primary decision-maker regarding what products and services are produced is the government. In this type of economic system, the government typically owns and controls the means of production and makes central decisions about the allocation of resources. This includes determining what goods are produced, how much is produced, and the methods of distribution.

The government's role in a command economy is to plan and direct economic activity, often aiming to achieve specific goals such as equality, social welfare, or industrial growth. This contrasts with market economies, where consumer preferences and producer responses dictate production decisions.

Given this structure, the correct answer reflects the centralized control characteristic of command economies, distinguishing it from other systems where consumers or market dynamics play a more significant role in determining production decisions.