Final answer:
Price controls on water, intended to aid lower-income individuals, can lead to water shortages. These occur when the controlled price is set below the market's equilibrium, resulting in a higher demand than supply. This can exacerbate social and health issues, especially in lower-income countries.
Step-by-step explanation:
According to the authors, price controls on water are designed to help lower-income people afford this essential resource. However, similar to other forms of price regulation, such as rent control, they can have unintended consequences. One such outcome is that, while the cost of water may remain affordable, the supply may not meet the demands resulting in shortages. When the actual market price is set below the equilibrium price by government controls, the quantity of water consumers want at that price exceeds the quantity supplied by producers, leading to water scarcity. This, in turn, can have multifaceted negative effects, such as hindering social mobility, impeding children's education, affecting people's health due to the physical strain of carrying water over long distances, and reducing the overall quality of life, particularly in lower-income countries where people may already struggle with limited access to amenities like clean water and electricity.