The Consumption of Bottled Water Increased Dramatically During the 1990s

question 115

Multiple Choice

The consumption of bottled water increased dramatically during the 1990s.If consumers' utility schedules for water remained constant over this time period,in order for consumers to stay in equilibrium,the price of bottled water must have

• A) risen because marginal utility increased since people consumed more bottled water.
• B) fallen.
• C) remained constant because the marginal utility schedule did not change.
• D) risen because the supply of water must have increased.
• E) We don't have enough information to say what happened to the price.

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Definitions:

Rent

The payment made by a tenant to a landlord for the use of a property or space.

Substitution Effect

The economic principle that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Output Effect

The Output Effect describes how changes in price levels affect the quantity of goods and services produced in an economy, influencing overall economic output.

Substitute Resources

Alternative means or materials that can be used to achieve the same function or production goal in the absence of preferred resources.