4. 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