Provide your answers in a separate write-up. Make sure your write-up is neat and organized, and make sure to dearly label each question part. Justify all answers and show calculations where applicable. Answers must be neatly handwritten or typed (11- or 12-point font, double-spaced), with minimal grammatical and spelling errors. Four towns share a common water resource. By buying open land along the watershed (the area from which the water flows), the towns can protect the water's purity from sewage, road runoff, agricultural runoff and other such sources of pollution. Because the towns share the water resource, they all benefit from improved water quality when an additional acre of land is protected, regardless of which town makes the purchase. Suppose that each town has the same demand for preservation of the water resource, which can be expressed in terms of the inverse demand for protective land as P = 34000 - 10Q_d, where Q_d is acres purchased, and P is a town's marginal willingness to pay. If the cost of land is $30,000 per acre: How much land will be purchased in total if each town operates independently? How much land will be purchased if the towns form a joint commission for land purchases with the goal of maximizing the welfare for all towns combined? Graph the preceding two situations. Which is the socially efficient solution and why? Discuss this in terms of the marginal social benefits and marginal social costs for clean water. Is clean water a public good in this case? Explain. Suppose that an expenditure today of $150,000 on insulating layers to prevent toxic landfill seepage would eliminate $1 million worth of expected health costs 20 years from now. If the social discount rate was 10%, would society be willing to spend the $150,000 today to install the insulating layers? What if the social discount rate was 5%? Now would society be willing to spend the $150,000 today? Assuming the 10% discount rate, what is the most society would be willing to pay today to avoid the $1 million worth of health costs 20 years from now