Cambridge AS A Level Business Studies/ ZIMSEC Advanced Level Business Studies/ Business Enterprise Skills Notes: Planned/Command Economy

  • We looked at the features of planned economies here
  • We will now examine the advantages and disadvantages of such an economic system
  • It is important to note that for the most part:
  • The advantages of command economies are usually the disadvantages of free market economies
  • The converse is also true, the advantages of free market economies are usually the disadvantages of a command economy

Advantages of command economies

  • Unemployment is usually low to none-existant as the government makes sure everyone has a job
  • All essential goods and services are produced even if they are unprofitable to make for example merit and public goods are provided sometimes free of charge
  • There is no duplication of resources
  • There is equitable distribution of wealth
  • The government is in charge so they can handle social costs such as pollution
  • Prices are kept in control
  • Elimination of waste that results from competition among entities providing the same goods/services


  • Consumers have limited choice as there is no brand variety
  • Business operations tend to be inefficient as there is no profit motive
  • Bureaucracy when it comes to making decisions
  • This makes the system inflexible when it comes to anticipating and satisfying consumer needs and wants that are constantly changing
  • Encourages corruption as it puts limitless power in the hands of a few bureaucrats

To access more topics go to the Advanced Level Business Studies page

To access more topics go to the ZIMSEC Business Enterprise and Skills page

To access more topics go to the Cambridge AS A Level Business Studies page