The Total solution for NCERT class 6-12
Points of Difference
Centrally Planned Economy
Market Economy
1
Ownership of factors of production
Factors of production are publically owned; i.e., public ownership.
Factors of production are privately owned.
2
Production motive
The motive of production is social welfare.
The main motive is profit making.
3
Governing factor
The production is governed by planning mechanism; i.e. according to the government plans.
The production is governed by price mechanism; i.e., by demand and supply.
4
Income distribution
The degree of inequality of income is low.
There exists unequal distribution of income.
5
Government’s role
The main role is played by the government−from production to distribution.
The main role is played by private players. They decide what to produce, while the role of a government is limited to maintaining law and order in the nation.