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Economists do not operate in a vacuum. If an economist is going to suggest that the price of a good needs to be increased, he or she needs to consider who will bear the increase in costs. Will the costs be distributed equally or will one group pay more than another group? Furthermore, an economist should ask if there is a more efficient way to allocate the good than by means of a broad-based price increase. This lesson focuses on the drought that plagued the Northeast in the summer of 1999, supply, demand, and cost/benefit analysis.
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