Four towns share a common water source. By buying open land along the watershed (area from...
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Four towns share a common water source. By buying open land along the watershed (area from which the water flows) the towns can preserve its purity from sewage, road runoff, and such. The land demand schedule for each town based on water treatment costs saved can be expressed as P = $34,000-10Qd where Qd is acres purchased and P is the price the town would be willing to pay. a. If the cost of land is $30,000 per acre, how much land will be purchased if each town operates independently? How much if they form a joint commission for land purchases? Graph the different possibilities. (If the economic theory is not clear, imagine representatives of the four towns sitting around a table, discussing the costs and benefits of purchasing different amounts of land.) b. Which is the socially efficient solution and why? How would the answers change if the price of land was $36,000 per acre? c. Discuss this in terms of the demand for clean water. Is clean water a public good in this case? Can water generally be considered a public good? Four towns share a common water source. By buying open land along the watershed (area from which the water flows) the towns can preserve its purity from sewage, road runoff, and such. The land demand schedule for each town based on water treatment costs saved can be expressed as P = $34,000-10Qd where Qd is acres purchased and P is the price the town would be willing to pay. a. If the cost of land is $30,000 per acre, how much land will be purchased if each town operates independently? How much if they form a joint commission for land purchases? Graph the different possibilities. (If the economic theory is not clear, imagine representatives of the four towns sitting around a table, discussing the costs and benefits of purchasing different amounts of land.) b. Which is the socially efficient solution and why? How would the answers change if the price of land was $36,000 per acre? c. Discuss this in terms of the demand for clean water. Is clean water a public good in this case? Can water generally be considered a public good?
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Required solution of all parts is given below Answer Ans a The demand function is given as P 34000 10Q d Lets put the price of the land in above equat... View the full answer
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