Centralized Resource Allocation in Planned Economies

Steps:

• Recall that a planned economy features government control over production and distribution.
• Identify key elements: state directs what, how, and for whom goods are produced.
• Match options to this definition, focusing on ownership and decision-making.
• Eliminate choices describing market-driven or mixed systems.

Why B is correct:

• In a planned economy, the state owns firms and centrally plans all production to meet societal goals, as defined by economic systems theory.

Why the others are wrong:

• A describes a market economy with private ownership.
• C mixes private and public production, characteristic of mixed economies.
• D outlines the price mechanism in free-market systems.

Final answer: B