Alex and Ben Are Both Loggers Wanting to Harvest Timber

question 199

Multiple Choice

Alex and Ben are both loggers wanting to harvest timber from the same forest. Alex prefers to harvest and replant at a sustainable rate; Ben wants to harvest as many trees as possible to maximize short-run profit and then move on. They face the same production costs. If property rights are well-defined and enforced,

• A) Alex could buy Ben's part of the land and harvest and replant in a sustainable manner.
• B) Ben could buy Alex's part of the land and harvest all the timber as quickly as possible.
• C) Incentives to harvest and replant in a sustainable manner are greater than with no property rights.
• D) Any of the results described in the other possible answers could occur in this situation.

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Definitions:

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Operating Expenses

Costs associated with running the day-to-day operations of a business, such as rent, utilities, and payroll, but excluding costs related to production.

Revenue

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Denominator

The bottom number in a fraction that shows into how many equal parts the whole is divided.