Managerial Economics 2nd Edition by William Boyes

Exercise 19

Although water is essential to life no matter where one lives, the demand for water differs across regions. In one study it was found that the price elasticity of demand for water in all regions of the United States ranged from 0.39 to 0.69.
a. Why is the demand for water price-inelastic?
b. In those regions where outdoor use of water makes up a relatively large portion of total use, the price elasticity is high. Why?
c. The demand for water in the summer months is greater than in the winter months. Explain why.