Asked by Andrew Lujan on May 28, 2024
Verified
If property rights are weak or uncertain, resource extraction will tend to
A) occur faster than the rate that would maximize the long-run stream of profits.
B) occur slower than the rate that would maximize the long-run stream of profits.
C) occur at the rate that would maximize the long-run stream of profits.
D) stop.
Resource Extraction
The process of retrieving raw materials from the natural environment for human use.
Stream of Profits
A continuous flow of earnings generated by a business or investment over a period of time.
- Comprehend the implications of regulatory frameworks, market defects, and entitlements to property on the speed of resource extraction.
Verified Answer
TB
Turky BasahelJun 02, 2024
Final Answer :
A
Explanation :
When property rights are weak or uncertain, individuals or companies may extract resources more quickly to ensure they capitalize on them before others do, rather than managing the resource for long-term profitability. This leads to a faster extraction rate than what would be ideal for maximizing long-term profits.
Learning Objectives
- Comprehend the implications of regulatory frameworks, market defects, and entitlements to property on the speed of resource extraction.