Question

(b) You own 100 acres of almond orchards in California. Your wife urges you to sell these rights so that she can renovate your kitchen. Instead, perhaps because you dislike the renovation plan, you insist on waiting at least one year before you consider the kitchen renovation. What is the nature of the economic return that you earn through this decision?

Answer 1

I can get the benefit of capital appreciation means if I sell after one year I will get more price of land than now. And also I can get two types of other economic return from this decision such as rent or a profit for one year till I sell the orchard for the renovation of the kitchen. I can get profit by selling the fruits of orchard or if I give this orchard to some individual then I will get rent from the land. I will be earning increasing returns to scale from this decision until I sell the rights.