Answer to Question #82338 in Microeconomics for Elijah Odame

Question

By the use of the concept of consumer surplus and marginal utility, explain how you will solve the water problem in your community if water is not metered.

Answer 1

Consumer surplus is based on the theory of marginal utility that benefits a consumer as a result of more unit of goods or services. The utility the goods or services provide vary from individuals to individual due to their preferences. Thus, in a scenario where water is not metered, consumers are likely to spend less due to the diminishing marginal utility they receive.