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Understanding Economic Systems: Production, Distribution, and Government Roles

This overview explores various economic systems and addresses key questions about production, distribution, and government involvement. We discuss how much an economy should produce based on available resources, including land, labor, capital, and entrepreneurial spirit. The Theory of Comparative Advantage is highlighted to demonstrate how societies can maximize efficiency in production. We also examine different types of economies—command, capitalistic, and mixed—and their adaptability to change, including the challenges of free market breakdowns.

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Understanding Economic Systems: Production, Distribution, and Government Roles

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Presentation Transcript

  1. Types of Economic Systems

  2. Entities

  3. Government Questions: 1 • 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

  4. What should be produced? The Theory of Comparative Advantage A society should produce goods and services that compliment its competitive edge.

  5. US Farmland • 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.

  6. How are the goods and services production • By the most efficient companies. • Sometimes by the government.

  7. Who receives the output?Income Distribution by Quintile

  8. Can the system adapt to change?

  9. These were so cool!

  10. State of the Art

  11. 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.

  12. 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

  13. Why has the government sector grown so much? • Free Market Breakdowns

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