We Would Expect the Total Utility of Water to Be

question 74

Multiple Choice

We would expect the total utility of water to be high but its marginal utility to be low. Why?

• A)Because water is a fluid and we don't need fluids to live as much as we need food.
• B)Because we need water to live and there is so much of it.
• C)Because we need water to live and there is very little of it.
• D)Because water's price is low.

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Definitions:

Cost To Suppliers

The total expenses incurred by suppliers in the process of producing and selling goods or services.

Externality

A consequence of an economic activity experienced by unrelated third parties; it can be either positive or negative.

Market Failure

Situations where the allocation of goods and services by a free market is not efficient, often requiring government intervention.

Negative Externality

Occurs when the production or consumption of a good or service imposes costs on third parties who are not involved in the transaction.