Alex and Ben Are Both Loggers Wanting to Harvest Timber

question 160

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. Refer to the information given.If no explicit property right is given over the forest land,then:

• A) a property right will be established when trees are cut down and brought to market.
• B) there is no property right over the harvested timber.
• C) Alex and Ben will likely work out an agreement on harvesting and replanting the land.
• D) that implies that government owns and regulates its use.

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Definitions:

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, used to measure inflation and purchasing power.

Aggregate Demand Curve

A curve representing the relationship between the economy’s price level and real GDP demanded per period, with other things constant.

Leading Economic Indicator

A statistic about economic activities that helps analysts and policymakers predict future economic trends and business cycles.

Economic Activity

The actions that involve the production, distribution, and consumption of goods and services within an economy.