In the production of an individual flag, its colours are determined by the materials that are available to make it. Cloth is dyed according to fixed specifications - in the case of national flags, normally the precise colours are set by law. Mostly they will be specified as Pantone colours.
The cloth to make flags is dyed according to these specifications. Some dyes are cheaper than others and as a result some colours appear more frequently in flags. Red and blue dyes, for example, are both very cheap.
More generally, governments and other bodies that use flags will choose colours for a very wide variety of reasons. In the case of national flags, colours usually have some historical symbolism. For example, the red in the Chinese flag is partly symbolic of socialism, but also a traditional colour of happiness in Chinese culture.
In the case of many African countries, those nations chose to use the Pan-African colours (black, yellow red, and green) as a statement of solidarity and freedom alongside other African countries.
Similarly, many South American countries use blue, red and gold in their flags, reflecting their history as provinces of the Spanish Empire that fought for independence under these colours in the early 1800's.
Every country has a different explanation for the colours it uses in its national flag.
Sporting teams and other organisations can chose a colour for many different reasons, but often there is some symbolism, tradition or history involved with them. Sometimes the colours just look good together.
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