Distinguish between a centrally planned economy and a market economy.
| S.No. | Points of Difference | Centrally Planned Economy | Market Economy |
|---|---|---|---|
| 1 | Ownership of factors of production. | Factors of production are publicly owned; i.e., public ownership. | Factors of production are privately owned. |
| 2 | Production Motive | The motive of production is social welfare. Factors of production are publicly owned; i.e., public ownership. | The main motive is profit making. |
| 3 | Governing Factor | The production is governed by a planning mechanism; i.e. according to the government plans. | The production is governed by price mechanism; i.e., by demand and supply. |
| 4 | Income Distribution | The degree of inequality of income is low. | There exists unequal distribution of income. |
| 5 | Government’s Role | The main role is played by the government – from production to distribution. | The main role is played by private players. They decide what to produce, while the role of a government is limited to maintaining law and order in the nation. |
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Welcome to the NCERT Solutions for Class 12 Micro Economics - Chapter . This page offers a step-by-step solution to the specific question from Excercise 1 , Question 5: Distinguish between a centrally planned economy and a market economy.....
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