ECON301 Lecture Notes - Lecture 7: Production Function, Effective Demand, Incrementalism
6 Nov 2017
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Demand for timber (sweden) demand for wheat and agriculture products (canada). If you are in step to then it is just a matter of time: history has proven it is wrong -> takes way more than 20-30 years. Led to development of modern coal, iron, and engineering industries: there are a great variety of sectors that made different countries take-off, there is no one specific industry that needs to be developed, must be enlarged effective demand. Introduction to these sectors + expansion of capacity: society must be capable of getting the capital to detonate this sector for take- off. And a high rate of plough-back by entrepreneurs: must increase the capacity and potential of other sectors. Indivisibility of production function: large fixed costs and constant marginal costs (falling average cost-> increasing returns). So it needs to be done at a certain scale for it to be feasible.
