One Reason Why Property Rights Help Achieve an Efficient Level

question 194

Multiple Choice

One reason why property rights help achieve an efficient level of pollution is because property rights

• A) force the marginal private cost to equal the marginal social cost.
• B) force the marginal social cost to zero.
• C) force the marginal external cost to a lower level than marginal private cost.
• D) eliminate marginal private costs.
• E) change the marginal external cost so that they are equal to the marginal social benefit.

---

Definitions:

Commercial Paper

Short-term, unsecured promissory notes, issued by companies, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Mortgages

Loans specifically created for purchasing real estate, secured by the property itself, which is to be repaid along with interest over a predetermined period.

Mortgage-backed CDOs

Collateralized debt obligations that are secured by mortgage-backed securities as the underlying assets.

Asset

An economic resource that is expected to provide benefits to the owner in future periods.