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In market economies, firms rarely worry about the availability of inputs to produce their products, whereas in command economies input availability is a constant concern.
In market economies, firms rarely worry about the availability of inputs to produce their products, whereas in command economies input availability is a constant concern. This is because
- in command economies, no market-pricing mechanism exists to incentivize resource suppliers to increase resource availability when a shortage occurs.
- in market economies, buyers of inputs can choose what price they are willing to pay for the inputs.
- in command economies, input availability is determined by central planners who may not correctly respond to consumer demand.
- in market economies, buyers of inputs know that consumers want to purchase the product.
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