Four towns share a common water source. By buying open land along the water shed (area from which the water flows), the towns can preserve its…

P =$34,000 – 10Q_d , where Q_d is acres purchased and P is the price the town will be willing to pay. If the cost of land is $30,000 per acre how much land will be purchased if each town operates independently? Draw the graph one town’s land demand and indicate the equilibrium land purchased. What will be the consumer surplus for each town’s residents? If the four towns come together and purchase land for this purpose what will be the equilibrium land purchased. Is clean water a public good in this case? What are the potential challenges with achieving the equilibrium outcome for land area purchased if considered as a public good?