Define the term "property rights." Explain why the lack of well-defined and enforceable property rights is detrimental to the smooth functioning of a market system
What will be an ideal response?
The term "property rights" refers to the rights that individuals or firms have to the exclusive use of their resources, within the confines of the law. Well-defined and enforceable property rights provide the incentive for people and firms to invest resources and undertake risks. This encourages the production of a wide range of goods and services. Without property rights and the means to enforce these rights, no person would want to undertake such a risk.
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Attractive industries have all the following, except
a. High supplier power b. Low buyer power c. High entry barriers d. Low rivalry
If the government establishes a price floor, it must also be prepared to
a. sell any additional goods created by the price floor b. create ration coupons to allocate the goods among consumers c. enter the market as an additional demander of the good d. handle the resulting excess demand e. create incentives for producers to remain in the market
Which of the following is not counted as income when the official poverty rate is calculated?
a. Medicaid benefits b. dividends derived from the ownership of stock c. earnings derived from a part-time job d. money income derived from transfer payments
Which of the following statements about economic models is correct?
a. Economic models are built to mirror reality exactly. b. Economic models are useful, but they should not be used for the purpose of improving public policies. c. Because economic models omit many details, they allow us to see what is truly important. d. Economic models seldom incorporate equations or diagrams.