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The fundamental difference between a market economy and a command economy lies in which of the following? aAbsolute and comparative advantages bSpecialization and trade cProperty rights and protection of private property dPositive and negative externalities eTaxes and subsidies

Question

The fundamental difference between a market economy and a command economy lies in which of the following? aAbsolute and comparative advantages bSpecialization and trade cProperty rights and protection of private property dPositive and negative externalities eTaxes and subsidies

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Solution

The fundamental difference between a market economy and a command economy lies primarily in "cProperty rights and protection of private property".

In a market economy, individuals and businesses have the right to own and control property, whether it be land, buildings, or other assets. They can buy, sell, and change their property as they see fit. This encourages competition and drives economic growth as businesses strive to produce goods and services that consumers want and are willing to pay for.

On the other hand, in a command economy, the government or a central authority owns and controls all property and resources. The government decides what goods and services to produce, how much to produce, and sets the prices. This type of economy does not rely on the laws of supply and demand like a market economy does.

So, the key difference between these two types of economies is the role of the individual or business (market economy) versus the role of the government (command economy) in controlling property and resources.

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