If Property Rights Are Not Clearly Defined and Enforced, Then

question 386

Multiple Choice

If property rights are not clearly defined and enforced, then

• A) some potential gains from specialization and trade are lost.
• B) resources are devoted to protecting possessions rather than to production.
• C) incentives for specialization based on comparative advantage are weakened.
• D) All of the above answers are correct.

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Definitions:

Supply Curve

a graphical representation showing how the quantity supplied of a good or service varies with its price.

Marginal Cost

The expense incurred by producing one additional unit of a product.

Average Variable Cost

The total variable cost of production divided by the quantity of output produced, reflecting the average cost of each unit of output on variable factors.

Exclusive Right

A legal entitlement granting someone the sole authority to engage in a certain activity or use a specific property.