If the Government Assigns Private Property Rights to a Common

question 111

Multiple Choice

If the government assigns private property rights to a common resource, then the

• A) marginal private cost becomes equal to the marginal social cost.
• B) resource is underutilised.
• C) government needs to set a quota to achieve efficiency.
• D) None of the above answers is correct.

---

Definitions:

Risk-Adjusted

A process or methodology that adjusts for the risk involved in a project or investment, allowing for more accurate comparisons or evaluations.

Equity Cost

The total expenses involved in acquiring equity financing, including direct costs like underwriting fees and indirect costs such as stock dilution.

Price/Earnings Ratios

A valuation metric for evaluating the relative attractiveness of a company's stock, calculated by dividing the market price per share by its earnings per share.

Earnings Reinvestment

The practice of reinvesting a company's earnings back into its business to fund growth activities rather than distributing them as dividends to shareholders.