Question

A developer plans to combine two adjacent lots into one larger lot, for which her asking price will be more than she previously had been asking for the two lots. She believes the one larger lot is worth more than the two separate lots based on which economic principle of value?

a) Principle of Anticipation
b) Principle of Substitution
c) Principle of Contribution
d) Principle of Plottage

Answer 1

The developer is likely basing her belief on the Principle of Plottage, which states that combining smaller lots into a larger lot can increase its value.

Step-by-step explanation:

The economic principle of value that the developer is likely basing her belief on is the Principle of Plottage. The Principle of Plottage states that the value of combining multiple smaller lots into one larger lot can be greater than the sum of the individual lots. This is because the larger lot has more potential for development and may offer greater benefits such as increased access or improved functionality.