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A. The market for bottled water is very competitive. However, the water that comes in a pipe to your home (water which may be better than the bottled water) is usually supplied by a government-owned utility. Why are there two different market structures for products that are nearly perfect substitutes?
B. Market economics says that the price of a product should equal its marginal cost. Is that realistic for a public water utility? Why or why not?
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Tanya operates a home business importing sweaters from Peru and sells them from her home. She collects $400,000 in revenue a year, and spends $200,000 on the sweaters and shipping costs, as well as $25,000 on advertising, accounting services and u..
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