Applied Economics Teaching Resources

an AAEA Journal

Agricultural and Applied Economics Association

Teaching and Educational Methods

Teaching Price Elasticity of Demand and Marginal Analysis using Household Water Pricing

Eric Edwards(a), Sara A. Sutherland(b), Anastasia W. Thayer(c)
(a)North Carolina State University, (b)Duke University, (c)Clemson University

JEL Codes: A20, Q25
Keywords: conservation pricing, graduate teaching, undergraduate teaching, urban water

Publish Date: August 2, 2023

View Full Article (PDF) | Request Teaching Notes/Supplemental Materials


Understanding the economics of urban water pricing is fundamentally about the concepts of price elasticity of demand and marginal analysis. Recent advances in our understanding of consumer response to water pricing, emerging discussions of equity issues, and water utility interest in innovative pricing approaches make this topic important to integrate into any class on natural resources or water economics. To aid instructors, we highlight current issues in the field and emerging research, and present materials used to teach urban water pricing to both undergraduate and graduate audiences. We present a variety of activities and resources to integrate concepts of price elasticity of demand, conservation pricing, utility considerations, and equity issues. After using these materials, students are expected to know how to calculate prices and elasticities and explain these values in the broader context of conservation and equity

Eric C. Edwards is an Assistant Professor at North Carolina State University. Sara A. Sutherland is a Lecturer at Duke University. Anastasia W. Thayer is an Assistant Professor at Clemson University (Corresponding author:

Copyright is governed under Creative Commons CC BY-NC-SA


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