Question

(a) A certain region licensed only one firm to supply tap water within that region. Graphically illustrate why it is more economical to have a sole water supplier in a particular region.

(B) list and explain three economic depravities.

Answer 1

Deprivates

1. The impact that water privatisation has had on consumers is difficult to establish. There is general disagreement about the overall impact. Many argue that consumers have been disadvantaged. One of the main reasons for this is because prices have risen. Once water supply is taken into private ownership there is very little, if any, competition. As a result, water company can raise prices without any opposition.

2. If their is only one supplier then the consumers may have to compromise with the quality of the product. Because they may not give sufficient care to the quality checks and purification since there is a huge demand.

3. Some times the supplier cannot meet the demand of whole consumers. They will have some limitations to solve the entire customer complaints consistently. This may make customer unsatisfied.