5. How should we interpret a situation in which aggregate MNB of figure 2.10 does not intersect w = W or, equivalently, the curves of figure 2.11 do not intersect at a positive price?

7. Monthly water use in the City of Utility is 32 million gallons, and the average household is paying $3 per thousand gallons. If the price elasticity of demand is 0.75, what is a good estimate of the aggregate water demand function in Utility? What units do the variables of your function utilize? Suppose that the rate is set at $3 because each and every 1000 gallons delivered to a household costs Utility exactly $3 to process and deliver, excluding any costs of natural water. What is the town's marginal net benefit function?

10. You are a manager within a water-using business that expects no change in future demand for its products. Your water is self-supplied using a permitted water source from which you pump and treat water. It costs you a constant $25 per unit of water for every unit used. Company water demand is w = (750/ p)² . The company owns 1200 units of transferrable water rights that it cannot exceed when pumping. The companys owner asks the following: I want to lease one-third of our water rights to my daughters company. Its important that my company break even on this lease experiencing neither a loss nor gain. How much money I should ask her to pay? Explain all this stuff to me using whatever tools you have.

11. Every household in a 100-household town has two demands for water: in-home consumption demand (w_h) and at-the-public-park recreation demand (w_r ). The parks central feature is a large lake. The average households demand information is contained in these two expressions: mb_h = (1/w_h )^(1/3)and mb_r = (16/w_r )^(1/4) . What is the towns total demand for water? Explain and justify your procedure.