Define rent seeking. Is rent-seeking activity likely to be highly profitable in the long run? Why or why not?
What will be an ideal response?
Rent seeking is using potentially productive resources to try and obtain transfers from the government. Rent seeking is not likely to be highly profitable in the long run because profits from rent seeking will encourage new rent seekers to enter the market. Increased competition for rents will reduce benefits from rent-seeking activity until they approximate a normal rate of return.
You might also like to view...
One reason financial systems in developing and transition countries are underdeveloped is
A) they have weak links to their governments. B) they make loans only to nonprofit entities. C) the legal system may be poor making it difficult to enforce restrictive covenants. D) the accounting standards are too stringent for the banks to meet.
In the U.S., the Revolutionary War (1775-1781) was immediately followed by an increase in:
a. trade. b. inflation. c. real per capita income. d. slave imports.
The U.S. sugar price support program has:
A. cost U.S. consumers much more than it has benefited U.S. sugar producers. B. cost U.S. consumers much less than it has benefited U.S. sugar producers. C. reduced the price of sugar to U.S. consumers. D. increased sugar imports as a percentage of U.S. sugar consumption.
Which of the following is NOT an example of common property?
A. cable TV B. gravity C. air D. sunshine