4 stake holders always

Pollution of Affluence v/s Pollution of Poverty

Relationship between ATC and MC is important
Relationship between AR and MR is important
Shutdown price is where P = Minima of AVC
Occurs
due to
no
barriers
to entry

Evaluation in TOF is based on:

i) Non-price differentiation for consumers ii) Price that consumers pay (allocative and productive efficiency)
iii) EOS and ability to conduct research iv) Response to the market of consumer demands
Example is SpaceX v/s NASA
3 ways to deal with monopoly power
Fear price wars
Well defined logic as to why prices will be rigid. Aim is to prevent a price war.
To make diagram simple there is no AC curve shown
Elasticity of Demand Curves opposite of price discrimination

ILE

Inelastic then elastic

draw with
Keynesian
Multiplier
 - 4 stakeholders (government, consumers, producers and workers)

Consumers
continue to
pay price
Pw for
Quantity Q2

Only
domestic
producers
receive the
higher price
Pw+s at the
greater
output
value.

Look from POV of domestic consumers and producers, foreign producers, govt and workers
then you devalue then you revalue
(Debit Curve)

(Credit Curve)
Common sense conclusion (can argue in terms of
imports or exports)
Evaluate of
depreciation
using
Marshall
Lerner
Condition
Differentiated in terms of: i) what can be traded ii) policy towards non member nations
 EUI

(anything that effects export/import prices)

Common Sense concept - use

the formula to figure this out
 Analyse in terms of PED Effects on revenue

One of the reasons why LEDCs remain LEDCs

 increase
in GDP
alongside
standards
of living

(Things that move LRAS)

Common Sense Knowledge from Geogo
 Important Domestic Factors (Link points to Poverty Trap)
i) Education and Health ii) Infrastructure iii) Credit (and Micro-Credit)
iv) Female Empowerment v) Appropriate Technology vi) Income Distribution
Additional Important Factors (all Institutional)
i) Taxation ii) Legal System iii) Corruption
iv) Political Stability

(govt. intervention to provide education and health

is same as from the market faluire chapter)
 Trade problems faced by ELDC’s
i) Over-specilization in narrow range
ii) Price Volatility of Primary Commodities
iii) Deteriorating Terms of Trade
iv) Lack of Access to International Markets

Policies to work on Trade problems faced by ELDC’s

i) Import Substitution (with Domestic goods and high protectionism) ii) Regional and Bilateral agreements that ensure fair competition
iii) Export Promotion (If countries retaliate due to with import substituition) iv) Trade Liberalization and WTO v) Diversification into higher value added good
Fair Competition
is a very
important
concept when
dealing with
regional and
bilateral
agreements
- A common sense argument
 (short and long term aid)

allows
improvement in
all areas of
domestic
development
(4.2)
- World Bank and IMF
 - Same as consequences of a current account deficit

(decreases govt. spending)

x - Credit Ratings worsen - Difficulty to get loans in future