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Economics question, centrally planned model and the free market model? 10 points?

what can you tell me about either model. most detail gets 10 points

Public Comments

1. idk but answer mine: http://answers.yahoo.com/question/index;_ylt=AraQMxltwFaY3sTewLCY9dvsy6IX;_ylv=3?qid=20081202071525AA8Jkwc
2. In a free market, prices and what is produced in the market is determined by supply and demand. When you go to the store to buy a loaf of bread, you know it will be there because the market demands it and this is reflected in the price indicated to consumers. In a centrally planned economy, the central planning authority chooses what and how much should be produced and prices are set arbitrarily. This is worse than a market economy as the market does not clear and a centrally planned economy does not have all the information to know what should be produced and wages are fixed in a centrally planned economy, so firms have no incentive to maximise output as there is no opportunity to maximise profits. Research 'The Great Leap Forward' in China. This was an economic disaster that resulted from the agricultural system in China being centrally planned. Just type it in on wikipedia, and it should give you a greater insight. Hope I helped :)