Which one of the following statements about water pricing in the United States is true?
a. As most water utilities are monopolies, they tend to make excessive profits
b. Water prices are normally set according to the average cost of providing water
c. Water prices are normally set according to the marginal water cost of providing water
d. Water prices are normally set according to the interaction of supply and demand
e. Water prices fluctuate significantly based on changes in seasonal demands
Ans: b. Water prices are normally set according to the average cost of providing water
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Refer to Table 19-5. The value of each automobile in gross domestic product equals
A) $7,000. B) $15,000. C) $18,000. D) $25,000.
For a typical person who is currently earning a low wage rate, the
a. substitution effect of a wage rate increase usually is stronger than the income effect b. substitution effect of a wage rate increase usually is weaker than the income effect c. income effect of a wage rate increase is usually zero d. substitution effect of a wage rate increase is usually zero e. substitution and income effects of a wage rate increase tend to work in the same direction
Economic profit equals NOPAY plus capital charges
Indicate whether the statement is true or false
Which of the following variables is left out of the simple economic model of the firm?
a. the marginal cost of production b. consumer tastes and preferences c. the fact that many firms actually earn profits d. the entrepreneurial decision-making process