consumers information Because goal is to distribute wealth evenly, no incentives or signals to buyers or sellers. Incentives to both buyer & sellers Rationing of goods can occur Signals that give producers and consumers information about the market System is not flexible because determined by government Price based System Centrally Planned System Flexibility Shortages can occur System is ‘free;’ it costs nothing to administer Requires large bureaucracy to run Black markets can arise Great diversity of goods & services Fewer choices of goods