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Not so much micromanagement as an initial understanding of economics that affect the setting
One graizing sheep produces 2 & 1/2 lb wool for cloth per year and as a consequence most of the population will be wearing rags after a year - and shortages mean not everyone will have a new blanket let alone home made clothing by year two.
If there isnt firewood for fifty people how do you cook dinner? Diseases set in within a year of a Fuel Shortage and consumption of uncooked food.
So what are we looking at? A Sick and diseased population with 50% of the Children dying from uncurable diseases and malnutrition within a year.

HerosBackpack |

The dinner question is very simple and very traditional. You don't make 50 fires in 50 houses - you make 1 fire in the baker's oven and everyone shares it. (Make your mark on your pie/stew etc and reclaim when cooked).
Wool isn't the only fibre you can make clothes from and some of those other fibres grow wild almost anywhere. Not to mention skins and furs from wild animals, hand-me-downs, patchwork quilts, rag rugs and plain old trade.

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The dinner question is very simple and very traditional. You don't make 50 fires in 50 houses - you make 1 fire in the baker's oven and everyone shares it. (Make your mark on your pie/stew etc and reclaim when cooked).
Except that isnt how they work...its about fuel. And the Big Baker's oven capable of cooking everyone's bread loaf or pie uses huge volumes of wood.
It also changes the nature of the community. No longer is Bob allowed to cook his own food for his own family - now all the grain is controlled and rationed and the Baker and the Grain Miller is the guys in control of food production.Wool isn't the only fibre you can make clothes from and some of those other fibres grow wild almost anywhere. Not to mention skins and furs from wild animals, hand-me-downs, patchwork quilts, rag rugs and plain old trade.
I include flax crops which can be used to make linen...and the popular cloth blend of linsy-woolsy. Sure you can wear scraps - of rags and hides, but if you have anyone other than a peasant (Aristocrats come to mind) they aint going to wear rags.

BenignFacist |

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You've created a stereotypical Meh'Ican Village compadres!
Complete with rag clad villagers! :D
Personally my cultural background means that when someone mentions 'settlement' and 'ye olde village' I visualise:
Ye Olde Village - Complete with anti-Hobgoblin/naughty thing defences
or, something with a more Mediterranean feel -
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I mention this because, one of the things about the Baldurs Gate series that I personally didn't like was what seemed, to my biased mind, a strange attempt to transpose the terrain of the fantasy settings I grew up with - which were in turn based on the history and natural features around me - onto an 'somewhere in the mid-west/south of America'... which resulted in shrubs and dust and.. sunshine? What the? :D
Note: My mental imagery of fantasy settings is based heavily on the south of England, the New Forest especially, Ireland, Scotland and Wales - so when there's talk of settlements in a new area I'm thinking of places like the New Forest/slices o' Ireland etc - Green, Stone, Wet, Sunshine a luxury!
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Hmm... so why am I typing all this out?
I find it fascinating how different cultures can have such varying geographical stereotypes when regarding 'Fantasy Settings'.
*shakes fist*

HerosBackpack |

A communal oven worked for centuries and still does in some places. Don't confuse cooked food with hot food :)
[url]http://www.oldandinteresting.com/[/url]
You can also make a coarser linen from nettles - but cloth is also where trade comes in. No-one said the place had to be completely self-sufficient. Perhaps they trade mined goods for cloth and luxuries. Or perhaps a wizard did it, it's hard to tell at this stage.
Sure, the aristocrats get the new clothes. Their direct servants get the castoffs still in good repair. The servants' families get the more worn clothes that the servants had been wearing.
The non-related families get the rags.
Anything left goes into the quilts or the rugs, unless you start up a shoddy and mungo business.

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Looks like the Settlement is in for crisis anyhow. Moisture got to all the clothing and may have destroyed foodstores. Grain for the next harvest will have been lost and the water supply is going to fail before next rains unless someone takes the cattle and sheep livestock out of the area and finds them permanent water.

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Not in favor of yellowdingo's recent proposal to destroy the grain and make the water supply fail. After all, it's a mountain stream in a semi-arid area, not a seasonal stream in a complete desert.
But I am in favor of establishing a granary and some vital resources for the area. Declaration: the town has a granary and gets burnable fuel from the mountains (probably lumber). Proposal: Perhaps they mine silver or gold to send to the cities? After all, making all those GP's to pay adventurers with takes a lot of gold...
As an aside, I think I can see what you're trying to do, yellowdingo, and while I appreciate your eye for detail and realism, I'm not sure we need an auditor. Also: do you play Dwarf Fortress?