Players Goal Examples

Consumers Maximize personal utility

http://www.mtv.com/videos/travie-mccoy/514093/billionaire.jhtml#id=1518072

http://www.youtube.com/watch?v=88UnFGsZo-4

Businesses Maximize long-run profit

http://money.cnn.com/galleries/2010/fortune/1004/gallery.fortune500_moneylosers.fortune/index.html

Government

Maximize social welfare

http://www.edd.cahwnet.gov/Unemployment/Federal_Unemployment_InsuranceExtensions.htm

How much should the economy produce?

• It depends on the resources it has available

• The resources are land, labor, capital and entrepreneurial spirit

• Production possibility curves – using resources efficiently and understanding the trade-off between producing item 1 versus item 2

The Theory of Comparative Advantage

A society should produce goods and services that compliment its competitive edge.

             • 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.

1997, 2002 and 2007 Census of Agriculture1997 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%

By the most efficient companies.

Sometimes by the government.

YEAR BOT 20

MID 20

TOP 20

TOP 5

2006 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

Country Agriculture

Industry

Service

United States

0.9% 20.4% 78.6%

South Korea

3.3% 40.7% 56%

Indonesia 13.1 % 46% 41%

• 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.

http://anepigone.blogspot.com/2008/03/government-spending-as-percentage-of.html

http://www.usgovernmentspending.com

http://www.heritage.org/index/Ranking.aspx

Government percent of overall spending

Free Market Breakdowns