When No Property Rights Exist

question 92

Multiple Choice

When no property rights exist

• A) no one has an economic incentive to care for common property, and an externality may well occur.
• B) there will be no production.
• C) externalities will be internalized by voluntary arrangements among a small group of parties.
• D) society will produce beyond the production possibilities frontier, but the allocation of resources is not apt to be optimal.

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Definitions:

Accrued Expenses

Expenses that have been incurred by a company but not yet paid or recorded in financial statements.

Adjusting Entries

Journal entries made in accounting to update the records for expenses and revenues that have accrued but are not yet recorded.

Internal Transactions

Transactions that occur within a company, affecting its internal accounts without involving an external party.

External Transactions

Financial transactions that involve parties outside of the company, impacting the company's financial statements.