Types of economic systems

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Presentation transcript:

Types of economic systems

entities Players: Goal Consumers: maximize personal utility Businesses: maximize long-run profit Government: maximize social welfare

Government Questions: 1 How much should the economy produce? It depends on the resources it has available

US Farm land 1997, 2002 and 2007 Census of Agriculture 1997 2002 2007 Approximate total land area (acres ) 2,262,462,020 2,263,960,501 2,260,994,361 Total farmland (acres) 954,752,502 938,279,056 922,095,840 Percent of total land area 42.2 41.4 40.8 Cropland (acres) 445,324,765 434,164,946 406,424,909 Percent of total farmland 46.6 46.3 44.1 Percent irrigated 11.5 11.6 12.7 On the arable land, which is only 11% of Japan's total land area, the population density is among the highest in the world. 145,833 sq mi in Japan – 15,000 square miles of farmable land 9,600,000 square acres • Census of Agriculture • Contact NASS Customer Service, 1-800-727-9540.

What should be produced? Country Agri. Indus. Serv. United States 0.9% 20.4% 78.6% South Korea 3.3% 40.7% 56% Indonesia 13.1% 46% 41%

How are the goods and services produced? By the most efficient companies. Sometimes by the government.

Who receives the output? Income Distribution by Quintile 2006 BOT 20 MID 20 TOP 20 TOP 5 116,011 3.4 8.6 14.5 22.9 50.5 22.3 2005 114,384 3.4 8.6 14.6 23 50.4 22.2 2000 108,209 3.6 8.9 14.8 23 49.8 22.1 1990 94,312 3.8 9.6 15.9 24 46.6 18.5 1970 64,778 4.1 10.8 17.4 24.5 43.3 16.6

Can the system adapt to change?

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State of the Art

Types of Economies Command – governments determines prices and quantities produced Capitalistic - free market interaction between buyers and sells determines prices and quantities produced Mixed – a mix where in some markets the government is a buyer, regulator, or producer. Even with a free market capitalist system there are times when the system does not operate in a manner that best suits the overall population. These occurrences are known as free market breakdowns. Some of these free market breakdowns are on the “Free Market Breakdown” page on the website.

How can the type of economic system be determined? Government percent of overall spending. http://anepigone.blogspot.com/2008/03/government-spending-as-percentage-of.html http://www.usgovernmentspending.com/ http://www.heritage.org/index/Ranking.aspx