Economic Games: Farmersi

To gain an understanding of economic principles you can read text books and look at graphs, but another useful tool is playing games utilizing economic principles.  One example is Farmersi (http://www.farmersi.net), which is based in the 1800's during the expansion into the west by the young United States.  This game demonstrates a limited mixed economy in that you typically have a choice to produce a grain crop or livestock as a farmer.  With a variety of economic conditions in each scenario (commodity prices, transportation costs, land costs and availability), you have to carefully choose what product to produce and when and where to sell which products.  The age old adage of buy low and sell high is very readily apparent.  When you first start a gamer of Farmersi, there is abundant public land available at a low price.  You should buy as much land at these low rates as possible (capital goods) to invest in future production (consumer goods).  Specializing in producing one product is another decision that must be made.  If you think producing only one product is a good idea because of the price for it, other competitors may have the same thoughts and this could increase supply above the current demand which then lowers the price for everyone.  With a limited amount of land available for your own use, you must decide what to produce depending on the cost of production and the price for the product on the local and export market.  Transportation costs must also be factored in when considering the exportation of goods.  If you try to maintain a mixed production, you may be able to use the sales of one product with a lower, but more consistent price to maintain income when the typically higher priced, but potentially more volatile product, drops to increases in supply or decrease in demand. 
  Demand and supply is of course the basis of most economic thinking and this game really demonstrates this relationship well.  As you produce and sell more of a product (wheat) the local price decreases.  If you were to export the wheat to another market, thus reducing the supply in the local market, the prices will increase in the local market.  You can also reduce supply by simply storing the wheat in a granary, which causes an increase in price as well.  Differences in supply and demand between the two markets (local and export) also gives you the option to do some price arbitrage, whereby you buy wheat in the local market at a lower price and sell it for a higher price in the export market.  Of course you have to take into account transportation cost to determine if this will be profitable.  You can increase supply of grain and livestock by investing in technology and education, which increases the efficiency of your production.  Profits can also be increased by technology and education by reducing production costs.  The earlier you can implement these improvements, the more time for them to be in effect and the greater their effects.
  When you try this game my advice is to invest in land first and then invest in technology and education to maximize your production efficiency.  Then you need to carefully consider local and export market prices and take into account transportation costs to determine where to sell your product.  In some instances you may be better off to sell only enough to cover costs in order to restrict supply and thus the prices in the future.  Good luck!