Types of economic systems

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Types of economic systems
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entities

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

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Government Questions 1

• How much should the economy produce?
• It depends on the resources it has available

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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.

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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

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How are the goods and services produced?

• By the most efficient companies.
• Sometimes by the government.

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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

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Can the system adapt to change?
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These were so cool!
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State of the Art
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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.

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