The Production Game

Year: 1

Number of workers: 4

Number of machines: 4

Use of Production Capacity: 0/12

(Value of productive capacity: £120)

Consumer Goods (each costs £20):

Capital Goods (each costs £40):

Utility this year:

Total Utility (All Years): 0

The factors of production are Land, Labour (workers), Capital (machines), and Enterprise. These factors are combined to make the goods and services that citizens of the economy wish to consume.

Below are the details for a fictional economy. For simplicity, assume that we have as much Land and Enterprise as is necessary. Capital and Labour, however, are limited.

You are the planner for this economy. Your aim is to make your people as happy as possible over a ten-year period.

Your economy can make two types of products:

• Consumer goods (e.g. clothing, phones, eating out). These make your citizens happy. Each consumer good costs £20 to make.
• Capital goods (e.g. machines and robots). These do not make your citizens happy but help you to make more consumer goods in the future. Each capial good costs £40 to make.

You have workers (labour) and machines (capital) that can produce these goods.

• Each worker can produce £10 worth of goods
• Each machine can produce £20 worth of goods

Using this information, you can work out how many consumer goods and capital goods you can produce given a number of workers and machines. e.g.:

• 2 workers (2 x £10 = £20) can produce 1 consumer good (£20)
• 1 machine (£20) can produce 1 consumer good (£20)
• 4 workers (4 x £10 = £40) can produce 1 capital good (£40)
• 2 workers and 1 machine (2 x £10 + £20 = £40) can produce 1 capital good (£40)
• 2 machines (2 x £20 = £40) can produce 1 capital good (£40)