As a discipline, economics is often misunderstood in the water supply field. Economies-of-scale, i.e., increasing unit costs with decreasing capacity, is a prevailing characteristic of water supply technology, and small utilities that serve fewer than 10,000 persons account for more than 80 percent of community water suppliers in the United States. In addition, many small utilities are privately owned and must request rate increases from public utility commissions. Price inelasticity of demand also has a special relevance for water users. An understanding of economic principles and concepts is necessary for the proper management of small water systems as well as large ones.