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An Apartment Complex Included a Fixed Price of Water in the Monthly

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Essay

An apartment complex included a fixed price of water in the monthly rent. One day the city decided to attach a water meter to each individual apartment and charge the tenant for actual water usage. As a result, water usage in the apartment complex went way down. Explain this situation using a principle of economics.


Definitions:

Direct Product Cost

Expenses directly associated with the production of specific goods or services, including materials and labor.

Cocoa

A powder made from roasted and ground cacao seeds used in making chocolate and chocolate-based products.

Factory

A building or set of buildings where goods are manufactured or assembled chiefly by machine.

Ending Inventory

The cumulative worth of products on offer for sale when an accounting cycle ends.

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