select the correct answer.\na severe water shortage recently hit country x. the government wants to ensure…
select the correct answer.\na severe water shortage recently hit country x. the government wants to ensure that drinking water remains affordable to the public. what policy or steps should the government undertake?\na. decrease spending on water reforms.\nb. introduce a price floor on drinking water.\nc. increase taxes for working individuals.\nd. introduce a price ceiling on drinking water.\ne. increase taxes for producers of drinking water.
Answer
Brief Explanations:
- A price ceiling is a government - mandated maximum price. In the case of a water shortage, if the government wants to ensure affordability, a price ceiling on drinking water would prevent prices from rising too high.
- Decreasing spending on water reforms (A) would likely not help in ensuring affordability as it may lead to less water availability in the long run.
- A price floor (B) sets a minimum price, which would make water more expensive, not affordable.
- Increasing taxes on working individuals (C) would reduce their purchasing power and not directly address water affordability.
- Increasing taxes on producers (E) may lead to producers reducing supply (if they can't pass on the tax) or increasing prices (if they pass on the tax), neither of which helps in ensuring affordability.
Answer:
D. Introduce a price ceiling on drinking water