When private property rights do not exist or are weak,

a.society will produce beyond the production possibilities frontier.

b.there will be no production.

c.resource misuse is likely because there are few or no incentives to care for common property.

d.externalities will be internalized by voluntary arrangements among a small group of parties

Private property rights involve

a.rights to enjoy the property in any way desired, but not to transfer or exchange the property.

b.exclusive rights to use property, but not to exchange the property.

c.rights granted by the government for renewable terms of 100 years or more.

d.exclusive rights to use property and to transfer ownership or exchange the property.

Common property is

a.property that has little economic value.

b.property owned by a group such as a club.

c.property that has mineral or oil deposits.

d.a resource everyone is free to use as much of as they want.

Economic theory suggests that if natural resources can be held as private property, then

a.owners will have an incentive not to abuse them.

b.people will hold them and refuse to make them available.

c.natural resources will be sold off for immediate use.

d.conservation will be nonexistent.

The costs associated with reaching and enforcing agreements are known as

a.private property costs.

b.public costs

c.transaction costs.

d.common property costs.

One difficulty in using voluntary transactions to internalize externalities is that

a.people usually don't understand what the real opportunity costs are that they face.

b.the government usually will not enforce contracts of this type.

c.the transaction costs of coming to an agreement can be very large when numerous people are involved.

d.people are motivated by self-interest and are often unwilling to engage in a transaction that might make another person better off.

Your neighbour in an apartment complex plays his music very loud late at night, which makes it difficult for you to get to sleep. You offer the neighbour $50, the monetary value you put on your sleep, to never play his music between midnight and 7 AM. By doing so,

a.you have failed to bring about an efficient solution since you should have complained to the police.

b.you've internalized the externality, but if your neighbour turns down the offer there will be a misallocation of resources.

c.you've indicated the cost of the externality, which internalizes the externality. Your neighbour bears a cost of $50 if he turns down your offer, which he will do if he values his music at more than $50.

d.you've indicated to your neighbour the cost of the externality he is generating but the externality is not internalized even if he accepts your offer.

Whooping cranes in Canada almost became extinct but chickens have never been under threat of extinction. The difference between the two is the result of

a.the greater marginal value of a whooping crane relative to a chicken, leading to greater "harvesting" of whooping cranes.

b.the differences in size between the two animals and the effect of the size differences on the costs of raising them

c.the ease of assigning private property rights on chickens and the difficulty of assigning private property rights on whooping cranes.

d.the greater marginal value of a chicken relative to a whooping crane, leading to over-hunting of whooping cranes.

The underlying cause of over-exploitation of Canada's ocean fishery stocks is

a.poor management of the fisheries resources by the federal government.

b.greed on the part of fishermen and fish processing firms.

c.the difficulty of assigning and protecting private property rights to ocean resources.

d.the need to ensure jobs and incomes for fishermen.

Recycling of paper products is typically promoted on the grounds that it will save trees. This recycling

a.actually has no effect on the number of trees since trees are a renewable resource.

b.is desirable because every ton of recycled paper on average replaces the harvest of 17 trees

c.is efficient since we would eventually have no forests without recycling.

d.may actually reduce the number of trees since most trees planted are planted by paper companies.

Natural resources are a nonrenewable resource. If we use them up, their prices will rise. During the 1980s

a.natural resource prices stayed the same, indicating that recycling and conservation efforts were successful.

b.natural resource prices fell, indicating that their quantities supplied increased faster than their quantities demanded.

c.natural resource prices increased sharply, indicating that they are becoming relatively more scarce.

d.natural resource prices increased slightly even though new sources of supply were found for almost all of them. This indicates that demand grew even faster.