1. Shrinking is when gross domestic product (GDP) decreases then the economy shrinks. Gross domestic product (GDP) is consumption + gross investment + government spending + (exports − imports). When consumption decrease that means people eat out less, save money, and buy cheap thing to survive. Gross investment is when people are selling stock not investing therefore GDP is decreasing. Government spending is fiscal policy that involve revenue raising and borrowing in the economy. We can reduce shrinking by increasing our GDP and to be fair with other counties that we trade with.
3. Diamond water paradox is the practical things that we use every day often has little to no value in exchange like water, spoons, socks, etc. And things that often have the greatest value in the market have little or no practical use like historic painting or a valuable sport card. Marginal utility is additional satisfaction or gain someone gets form using or purchasing an additions unit of a …show more content…
In ling run the price will be equal to the marginal cost. In perfectly competition the market structure clearly helps buyers. In monopoly holds substantial market power, so firms set prices using profit-maximizing rule. Without having to worry about competition driving the price down to marginal cost. And so both have market share, price control and barriers to entry. In monopoly there is only one firm that the price and supply levels of goods and services. In perfectly competitive market there is many firms. Producers that are in perfectly competitive market are going to have more opportunities to see their produces. Producers that are in monopolistic competitive market are going to have harder time selling their product because there’s only one firm. Perfect competition is more desirable because all producers will have the same price in the market and consumers don 't have to worry about prices
3. Diamond water paradox is the practical things that we use every day often has little to no value in exchange like water, spoons, socks, etc. And things that often have the greatest value in the market have little or no practical use like historic painting or a valuable sport card. Marginal utility is additional satisfaction or gain someone gets form using or purchasing an additions unit of a …show more content…
In ling run the price will be equal to the marginal cost. In perfectly competition the market structure clearly helps buyers. In monopoly holds substantial market power, so firms set prices using profit-maximizing rule. Without having to worry about competition driving the price down to marginal cost. And so both have market share, price control and barriers to entry. In monopoly there is only one firm that the price and supply levels of goods and services. In perfectly competitive market there is many firms. Producers that are in perfectly competitive market are going to have more opportunities to see their produces. Producers that are in monopolistic competitive market are going to have harder time selling their product because there’s only one firm. Perfect competition is more desirable because all producers will have the same price in the market and consumers don 't have to worry about prices