ECO 1000 Lecture Notes - Lecture 2: Sub-Saharan Africa, Walmart, Nash Equilibrium
Document Summary
Value of marginal product of labor = vmpl = p x mpl = . How you accumulate physical capital. don"t consume (thing that. Enterprise zones: incentives to relocate to poor neighborhoods. Make people more productive: goal: raise wage. P x mrl (raise) vmpl increases w. Through foreign investment and overtime increased their savings rate. Richer country can attract foreign investment and domestic saving, but poorer countries can"t, they"ll need foreign aid. **monopoly always a welfare loss restrict output, raise price, lower welfare. Technology and research & development type monopolies, can receive patents. We trade off short run welfare loss against having incentives to innovate eventually allows for long-term welfare gain (usually through patents) 1: force them to produce where mc = d, but subsidize them to make up for loss because profit would be a loss otherwise. Price discriminating monopolist: mc = mr in each market to maximize welfare: monopoly power, segment market, prevent resale.
