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If I Use 1,000 Gallons of Water a Month at a Price

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Essay

If I use 1,000 gallons of water a month at a price of $.01 a gallon, is my consumer surplus likely to be large or small?
Explain.


Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing for full adjustment to market changes.

Perfect Competitor

A theoretical market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to efficient pricing and resource allocation.

Long Run

In economics, the long run refers to a period in which all factors of production and costs are variable, allowing for adjustment to changes in market conditions.

Marginal Revenue

The extra revenue obtained by selling an additional unit of a product or service.

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