Early settlers in the town of Dry Gulch drilled wells to pump as much water as they wanted from the single aquifer beneath the town. (An aquifer is an underground body of water.) As more people settled in Dry Gulch, the aquifer level fell and new wells had to be drilled deeper at higher cost. The town council has proposed putting a meter on each household's pump, and charging residents for each gallon of water used. This would:
A. have no effect on water use.
B. reduce total economic surplus.
C. discourage residents from using too much water.
D. convert private property to public property.
Answer: C
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If the government has a budget deficit, crowding out might occur. Crowding out leads to all of the following EXCEPT
A) a higher real interest rate. B) a decreased quantity of investment. C) a smaller capital stock in the future. D) decreased private saving.
The supply-demand mechanism will bring an international market into equilibrium
a. at a price below the domestic price. b. where domestic supplies are less than domestic demand. c. with one nation's price higher than the other nation's price. d. when the quantity demanded for exports is equal to quantity supplied.
Economic expansions might lead to inflation because an expansion leads to:
A. a decrease in the unemployment rate, which increases wages. B. an increase in the unemployment rate, which increases wages. C. a decrease in the unemployment rate, which decreases wages. D. an increase in the unemployment rate, which decreases wages.
Suppose James and Katherine are successful in establishing a profitable market for their "ghost restaurants" in what is a monopolistically competitive industry. In the long run, James and Katherine will most likely find it ________ to remain profitable
as they face ________ competition in the "ghost restaurant" market. A) harder; more B) harder; less C) easier; more D) easier; less