In Market Economy, the production and distribution of service and right take place with the help of a free market which is guided by a free price system in the market whereas in Command economies the production and distribution of service and goods are monitors by the government or responsible authority of a country.
The market economy is also termed as Free Market Economy, whereas the Command economy is called a planned economy.
Command Economy is the centralized part of the economy as the economy is controlled by the government, the government is the one who takes care all the activity in regards of a factor of production and takes all the necessary decision in regards of company activity, whereas in Market Economy all the decision power lies in the hand of individual and firm. As in this, the firm decides what to produce, when to produce so it can be said that the firm itself control the factor of production.
Command economy decision is taken by the government, so it takes into consideration the need of the public and makes all the decisions in regards to society so that it able to help the community in regards to the factor of production. The motive in a command economy is social as the government take into consideration about the whole economy whereas in Market economy the decision is taken by average individual a firms as it decides as per the company need and preference about what to produce so the motive become self so this makes the affect the overall interest of society as the firm is making a decision as per their need and preference.
Command economy does not get affected by the change of demand or supply as it is not connected by the same, so any change in the demand and supply will not affect the economy whereas the market economy is the one in which the price is directly connected with the demand and supply so if there is any change in demand and supply so it will directly affect the cost of the products. So if there is high demand and less amount of supply than the price will automatically rise in the value of the product.
By, Mike is a senior marketing professional for Myassignmenthelpreview in Australia. He has expertise in marketing. He is working as an advisor and consultant.