EC 060 Lecture Notes - Consumerism, Pareto Efficiency, Market Power

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September 4: order & the invisible hand, if everyone works in self-interest, then societal needs will be met, principles, society involves self-interest based on personal freedom. Ownership of private property: division of labour. Lots of small production firms: interaction will establish equilibrium. Will meet everyone"s needs: how this will happen, markets will establish competitive prices, capitalism will establish quantity of goods people want. In price of cars & profit rate. This is equalization of wage rates/labour & profit. Rates (they follow same pattern: laissez-faire gov"t, maintain rules of game (protect property ownership, enforce laws, public goods gov"t ought to finance (extent= debatable) Colonies, education, infrastructure: gov"t cannot establish monopolies (joint-stock companies, problems with this view, large-scale firms may be an outcome of the capitalist market, public goods. How broad: resource limits, knowledge limits, sufficiency of aggregate demand. Capitalist dynamics: accumulation of capital, people invest money: Nothing: investment is a means of employing laborers.

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