Most people think that a raise in price for water will reduce the quantity demanded for water initially, but that effect gradually will wear off and eventually consumers will consumer more water to the level before the raise in price. If we take a closer look to the trends, we will discover the assumption is not true. Almost all the data show a falling demand, with only a few exceptions. This finding is somewhat surprising for most people. But this merely only show water is elastic.
People react sensitively to a change in price for water, even if water is a necessity.
Next, we will examine the domestic demand for water. The results are very similar to that of sprinkling demands except with much greater magnitude. Once again, the law of demand holds, and the domestic use of water is even more elastic than the sprinkling demand. Normally we would take supply into consideration of pricing decision. But in this water example, the supplier of water is nature, thus water is basically free.