Please give me the letter answers 15. All of the following arguments have been a
ID: 1127260 • Letter: P
Question
Please give me the letter answers
15. All of the following arguments have been advanced to support the proposition that property rights in things promote economic efficiency except
(a) property rights create incentive for work
(b) property rights reduce congestion externalities
(c) property rights promote conservation of resources over time.
(d) property rights lead resources to be transferred to their most valued uses.
(e) property rights encourage parties to undertake only actions that are both Pareto and potentially Pareto efficient.
16. The economic argument that best explains why the common law regarded possession or occupancy as the basis of property is that
(a) the clarity of the rule reduces costly disputes among parties.
(b) other rules require greater governmental interference with voluntary transactions.
(c) by supporting the status quo it encourages investments in improving land
(d) it eliminates the need for private enforcement.
(e) it promotes Pareto superior transactions.
17. The weak version of the Coase theorem states that in the absence of transaction costs
(a) resources will be put to identical uses independent of the initial assignment of rights.
(b) wealth effects are independent of the initial assignment of rights.
(c) parties will be compensated for any harms caused by externalities.
(d) resources will be allocated efficiently independent of the initial assignment of rights.
(e) all of the above.
18. Suppose a factory emits pollutants that injure adjacent homeowners. The law will promote efficiency if it
(a) creates an incentive for the factory to relocate to a different location if the harm it causes is greater than its profits.
(b) creates an incentive for homeowners to move to a different location if the cost of moving is less than the harm caused by the pollution.
(c) holds the factory liable for damages or enjoins it from polluting when the harm it cause is greater than its profits.
(d) holds the factory liable if the homeowners located there first and holds the factory harmless if it located there first.
(e) none of the above.
19. The common law rule that gives the first committed searcher the right to prevent others from searching
(a) eliminates rent seeking
(b) creates efficient incentives to search for abandoned property
(c) increases the probability that abandoned property will be found
(d) shifts potential rent seeking from the rescue itself to the earlier stages of searching for abandoned property
(e) increases the number of rescuers by increasing the reward from locating abandoned property.
20. From the standpoint of positive law and economics, one would predict that the principal defense to trespass on land would be
(a) lack of knowledge that the land was privately owned.
(b) the landowner was not using the property at the time of the trespass and hence there was no harm.
(c) high transaction costs prevented a transaction between the trespasser and the owner.
(d) the benefits from trespassing were greater than the cost imposed on the landowner..
(e) the landowner failed to take reasonable precautions to prevent the trespass.
21. When the government wants to build a highway that cuts across the property of many owners, the economic justification for eminent domain is it
(a) overcomes high transaction costs caused by potential hold out problems.
(b) compensates land owners for the value of their property.
(c) reduces the incentive of property owners to make inefficient investments in their property.
(d) makes it more likely that the government will undertake socially valuable projects.
(e) all of the above.
22. The phrase that best describes the economic rationale for “no duty of care to a trespasser” is
(a) the trespasser is usually the lowest cost avoider of an accident.
(b) the property owner can’t foresee that people will trespass.
(c) high transaction cost prevented the trespasser from negotiating with the owner before entering the property.
(d) the cost of care to the owner is usually higher than the reduction in expected damages to the trespasser.
(e) wealth is maximized by requiring the property owner to take precautions to prevent an accident but not a trespass.
23. To make the Hand formula an economically correct statement of negligence requires
(a) including activity level changes in the burden of precaution (B).
(b) substituting incremental for total changes in the formula’s variables.
(c) substituting the marginal cost of care for B but leaving unchanged the benefit side of the formula.
(d) adjusting the probability of an accident for the amount of the victim care.
(e) making explicit the causal connection between the probability of an accident and the burden of precaution.
24. Economics predicts that negligence would be more efficient than strict liability
(a) in alternative care situations.
(b) when injurers have more information about accident prevention than victims.
(c) when there are large differences among injurers in the costs of taking care.
(d) when a reduction in the victim’s activity level is the efficient way to prevent an accident.
(e) when the cost of victim precautions is greater than the reduction in expected damages from these precautions.
Explanation / Answer
15)
Property right helps to deal with externalities that are generally neglected by the market forces. property right incentivizes more efforts. But it is not correct that property right always leads to pareto efficient outcome.
right answer is (E)