In 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. In 2005 the price of water doubled. The community then drilled the well deeper and started pumping again. In this community, Multiple Choice the supply of water is perfectly inelastic because it is a finite resource. higher water prices can reduce quantity demanded but cannot increase quantity supplied.
In 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. In 2005 the price of water doubled. The community then drilled the well deeper and started pumping again. In this community, Multiple Choice the supply of water is perfectly inelastic because it is a finite resource. higher water prices can reduce quantity demanded but cannot increase quantity supplied.
Chapter1: Making Economics Decisions
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Transcribed Image Text:In 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. In 2005 the price of
water doubled. The community then drilled the well deeper and started pumping again. In this community,
Multiple Choice
the supply of water is perfectly inelastic because it is a finite resource.
higher water prices can reduce quantity demanded but cannot increase quantity supplied.

Transcribed Image Text:the supply of water is perfectly inelastic because it is a finite resource.
higher water prices can reduce quantity demanded but cannot increase quantity supplied.
markets cannot reach equilibrium because there is a persistent shortage of water.
water production is characterized by increasing opportunity costs.
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