Question: a village of 20 people is deciding how much openspace...
Question details
 A village of 20 people is deciding how much openspace land to acquire. Because of differences in preferences, there are two types of demand functions for openspace land amongst the citizens. In particular, 10 of the people have a demand function given by P = 10 – Q, while the remaining 10 have the demand function P = 8 – 2Q, where Q is quantity of openspace in acres and P is price in dollars.

 Since the openspace land is both nonexcludable and nonrival, it can be considered a public good. What is the equation for the market demand function for openspace land? Depict the market demand function graphically.
 Describe why aggregation of individual demand functions differs for public goods compared to private goods. (why not how they are aggregated differently)

 If the marginal cost of an acre of openspace is $40, what is the socially optimal quantity of openspace land? In other words, what quantity of land maximizes net social benefits (social benefit – social cost). Illustrate this point on the graph that you drew in part (a)