A planned economy is an economic system in the decisions regarding investment and production are planned by a central authority usually a government body. A planned economy is also referred to as command economy

Advantages of Planned Economic system

• Central planning leads to full utilization of factors of production, hence reducing unemployment of resources
• Planned economic system leads to mass production thus economies of scale are possible due to mass production taking place in the economy
• Essential goods provided by natural monopolies such as the supply of domestic power or defense can be provided efficiently through central planning since the government is controlling how they are distributed.
• There are less random differences in wealth and income distribution than in market economy since the government controls distribution of resources through setting prices of commodities
• Planned economic system leads to production of a wide range of   good and services for the entire population thus less production of luxury goods for a few people in the population

Disadvantages of Planned Economic system

• Consumers in a planned economic system have little say over what is produced and people may have little to say in what they do in life due to choices being made to them by the government.
• The task of assessing the available resources in a country and deciding on what to produce, how much to produce and how to produce and distribute can be too much for the central planning body.
• The government may incur a lot of costs to maintain the planning body hence could be toll on the countries budget.
• In a planned economy the government makes all important decisions this could lead to emergence of influential and powerful government departments. This large influential government bodies can lead to bureaucracy which will result in poor planning. Equally state officers can become corrupt and embezzle funds meant for projects.
• Since competition between different producers is not given emphasis as in the free market economy, there is no less incentive to improve existing systems of production or work. Workers are not given real incentives to work harder therefore  production levels are not as high as they could be.

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