Scenario 15-1 Consider the Market for Water in a Small Town in Town

Scenario 15-1
Consider the market for water in a small town in the Old West.Assume that the only source of water is the underground aquifer that lies directly below the town.Wells are used to supply water to the entire town.
-Refer to Scenario 15-1.If dozens of residents have their own wells,which statement most adequately describes the behaviour of sellers of water

A) Because water is a necessity of life, there will be no decline in the quantity of water consumed, regardless of how high the price is raised.
B) Sellers will be able to charge a premium for the water.
C) The price of a litre of water will exceed its marginal cost.
D) The price of a litre of water will be driven to equal its marginal cost.

Correct Answer:

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