Weak property rights encourage faster extraction than would otherwise maximize the long-term stream of profits. True...
Weak property rights encourage faster extraction than would otherwise maximize the long-term stream of profits.
True or False
Homework Answers
Yes, the given statement is true as property rights are the legal rights to own or use a particular resource or property. It defines who will own and use the resources. A weak property right over any resource will provide incentive to resource users extract the resource at a very fast rate. It will lead to over-exploitation of resources. The weak property rights build pressure on the regulator by the users of the resource. On the other hand, a strong property rights minimize the over-exploitation of resources. The strong property rights leads to more economically efficient usage of resources and thus leads to maximization of long term stream of profits.
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Weak property rights encourage faster extraction than would
otherwise maximize the long-term stream of profits.
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