EC 045 Lecture Notes - Lecture 16: Government Spending, Economic Surplus, Protectionism
26 Apr 2018
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Document Summary
Consumer surplus- area below demand curve and above market price. Represents improvement in consumers" welfare as they participate in market. Producer surplus: area below market price and above supply curve. Supply curve shows how much producers are willing to sell at each price. Political economy of import substituting industrialization in l. a: state. Large direct participation in the economy: state run enterprises. Gov agencies promoting specific sectors: local interest groups. Industrialists and workers allied with the government vs. oligarchy: multinational investments from argentina, brazil and mexico. Import subsidizing industrialization: structure of manufacturing industries. Oligopolistic and capital intensive: trade imbalances and scarcity of foreign exchange. Model biased against export sector and agriculture. Large demand for foreign exchange: budget deficits.
