Discuss the role of government in each of the different economic models: pure centrally planned, pure market, market economy, and mixed economy.

Market economies and command economies occupy two polar extremes in the organization of economic activity. The primary differences lie in the division of labor or factors of production and the mechanisms that determine prices. The activity in a market economy is unplanned; it is not organized by any central authority but is determined by the supply and demand of goods and services. The United States, England, and Japan are all examples of market economies, as are most developed, democratic nations. Alternatively, a command economy is organized by government officials who also own and direct the factors of production. China, North Korea, and the former Soviet Union are all examples of command economies.