Do environmental goods have demand curves? Consider drinking water. In many places in the world, water supplies carry some risk to those who drink it, due to both natural and anthropogenic (human-caused) effects. The water can be made safer to drink by such actions as filtering, boiling, and use of chemical decontaminants.
(a) Do you expect the cleanliness of drinking water to be affected by income? Do you expect it to be a normal or an inferior good? Why?
(b) Do you expect the cleanliness of drinking water to be affected by the cost of decontamination? For instance, do you think the number of people with access to cleaner water is affected by the availability and price of fuel to boil water?
(c) Does cleaner drinking water have substitutes or complements? Provide one example of each, or explain why you don't think an example exists.
(d) What factors, if any, might change people's preferences for cleaner drinking water? Provide one example of something that might change people's preferences, or explain why you don't think an example exists.