In an Effort to Maintain Privacy and Enhance Property Values

Essay

In an effort to maintain privacy and enhance property values, three homeowners, Deidre, Eugene, and Farhad, are considering leasing a portion of adjoining vacant land for a private park. Table 5-1 shows each person's willingness to pay for each quantity of the land.
a. Complete the column in Table 5-1.
b. Graph the marginal social benefit curve.
c. Suppose the landowner is willing to lease a portion of her land according to the following supply schedule given in Table 5-2. On the same diagram, graph the supply curve.

d. What is the optimal quantity of land that homeowners should lease? Explain your answer.
e. Explain why a park of 5 acres is not optimal.