In a command economy (also called a planned economy), the government makes all major economic decisions. It decides what goods to produce, how much to produce, who produces them, and at what price they are sold. Private enterprise is either banned or severely restricted.
The most famous example: the Soviet Union (1922-1991). The government ran 5-year plans dictating everything from steel production to bread prices. Today, North Korea and Cuba are among the few remaining command economies. China was a pure command economy under Mao but has since introduced massive market reforms.
The advantages: no unemployment (the state employs everyone), income equality, and rapid mobilization of resources for national priorities. The disadvantages: chronic inefficiency, shortages, poor quality, and lack of innovation. Without market signals (prices set by supply and demand), central planners cannot efficiently allocate resources — leading to surpluses of unwanted goods and shortages of needed ones.