Business, 23.05.2020 01:01 mlguerrero12

Fortville must decide how much open space land to acquire. Residents enjoy the recreation and amenity benefits of the open space, but acquiring and managing land is costly. You have determined that amongst the 15 residents of the town, 10 residents have preferences for open space land given by Demand function 1 below, and the remaining 5 residents have preferences given by Demand Function 2, where P represents the Marginal Benefit and Q the acres of open space.
Demand Function 1: P 100-.05Q
Demand Function 2: P = 75-.25Q
A. Graphically illustrate the market demand function for open space, which is a public good. Be careful to account for the fact that the marginal benefits of open space cannot be negative.
B. If the marginal cost to the town of acquiring and managing an acre of open space is $700, how many acres should the town acquire if it's objective is to maximize net social benefits? What are the total benefits and total costs associated with this decision?

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