At the time that I was writing this chapter the United States was full of prominently displayed American flags as a result of the terrorist attacks on the World Trade Center. A Mrs. Parrot erected a ten-foot flagpole in her front yard, landscaped its base and raised an American flag. She was a citizen of a condominium, which had a rule against flagpoles in the yard although not those attached to the house. Rather to my astonishment, and that of most other people, I suspect, the condominium association began legal proceedings against her. Her immediate neighbors did not object to the flag and in the current patriotic mood it seems unlikely that anybody much really objected. Nevertheless the condominium association governors objected and sued.5
For example, if Sergio bought a new law-nmower to accommodate new- landscaping clients, rather than for replacement, he would be increasing the capacity of his lawn-mowing service. The capital cost of the lawnmower in the first year would be its associated loss in market value over that year. The installation cost would probably be negligible.
Sergio likes hiring engineering students to work in his landscaping business during the summer because they are such hard workers and have a lot of common sense. The students are always complaining about maintenance problems with the lawnmowers, which are subject to a lot of use and wear out fairly quickly. His routine has been to replace the machines every five years. Clarissa, one of the engineering student workers, has suggested that replacing them more often might make sense, since so much time is lost when there is a breakdown, in addition to the actual repair cost.
All long-lived assets eventually require replacement. Consequently, the issue in replacement studies is not ii hether to replace an asset, but when to replace it. In this section we consider the case where there is an ongoing need for a service provided by an asset and where the asset technology is not changing rapidly. (This is the case for Sergio's landscaping example at the beginning of this chapter.) Several assumptions are made.
Externalities can also result in too little production, as the example of home repair and landscaping shows. In Figure 18.2, the horizontal axis measures the home owner's investment (in dollars) in repairs and landscaping. The marginal cost curve for home repair shows the cost of repairs as more work is done on the house it is horizontal because this cost is unaffected by the amount of repairs. The demand curve D measures the marginal private benefit of the repairs to the home owner. The home owner will choose to invest q in repairs, at the intersection of her demand and marginal cost curves. But repairs generate external benefits to the neighbors, as the marginal external benefit curve, MEB, shows. This curve is downward sloping in this example because the marginal benefit is large for a small amount of repair but falls as the repair work becomes extensive. The marginal social benefit curve MSB is calculated by adding the marginal private benefit and the marginal external benefit at...
Homeowners Guide To Landscaping
How would you like to save a ton of money and increase the value of your home by as much as thirty percent! If your homes landscape is designed properly it will be a source of enjoyment for your entire family, it will enhance your community and add to the resale value of your property. Landscape design involves much more than placing trees, shrubs and other plants on the property. It is an art which deals with conscious arrangement or organization of outdoor space for human satisfaction and enjoyment.