Final answer:
To construct a demand function for vanity license plates in Maryland, we need additional data points. With only one data point ($25 fee, 2.13% demand), we can suggest a hypothetical linear function but cannot determine its exact form.
Step-by-step explanation:
The question asks us to construct a demand function, q(x), for the percentage of Maryland's population that will request vanity license plates for a fee of x dollars. Given that the current fee is $25 with a demand of 2.13%, we can use these data points to create a linear demand function. However, without additional data points showing how demand varies with price, we cannot derive an exact function. In reality, more data points would be needed to construct an accurate demand function, which typically follows the law of demand - as the price increases, the demand decreases. Nonetheless, assuming a linear relationship for simplicity and without loss of generality for this example, we might suggest a hypothetical function such as q(x) = a - bx, where a and b are constants to be determined from further data. In this instance, we only know one point on our demand curve (q(25) = 2.13).
Revenue generated from fees, like for vanity license plates, is one way state governments raise funds, in addition to other methods such as sales taxes and taxation on personal income and corporate earnings. Unlike toll road taxes which can be inefficient due to their high collection costs, fees for services like license plates are a straightforward method to increase state revenue.