Exercise 5.5- Long Costs and Economics of Scale

Spring Meadows landscaping is a company that provides all the services . They have full-time employes, Spring Meadow company deals with not only landscaping but building decks and patios. Outdoor light and water feature installation. Since they are working year round their personnel cost is very high and need continuous work to be profitable. Some of the jobs also require experienced workers hence they don’t have many students working for them and have to pay high wages.As Spring Meadows is paying higher wages, more rent for bigger office and multiple equipment. There are some costs to running the business as follow:

Short Run Cost:
Cost of repair on various equipment
Cost of oil and fuel
Cost of regular maintenance
Cost of advertising

Fixed Cost:
Cost of rent for the office
Cost of utilities
Cost of personnel