According to the information provided, if dozens of residents have their own wells, which of the following statements most adequately describes the behaviour of sellers of water?
A)sellers will be able to charge a premium for the water
B)the price of a gallon of water will be driven to equal its marginal cost
C)the price of a gallon of water will exceed its marginal cost
D)since water is a necessity of life, there will be no decline in the quantity of water consumed, regardless of how high the price is raised

Question

Quizplus · Accepted Answer

If many residents have their own wells, the sellers of water will face stiff competition, which will force them to lower prices so as to compete effectively in the market. As such, the price of water will be driven to be equal to its marginal cost, since the sellers will need to cover their costs while still keeping the prices low enough to be competitive. Therefore, option B is the correct answer.

According to the Information Provided, If Dozens of Residents Have