G202 Exam 1: Topic 2

Question 1

Communal Property Rights

Answer 1

• Everyone owns the asset

- Over-utilization occurs, no one has incentive to conserve for future

Question 2

Government Property Rights

Answer 2

Property decisions made by a small group of elected political representatives (land, historical buildings)

Question 3

Secure Private Property

Answer 3

• Specific owners of resource

- Give owners incentive to create value, maintain and conserve, innovate, and engage in voluntary exchange

Question 4

Patent

Answer 4

Right to exclude all others from using, producing, or selling an invention

Question 5

Trademark

Answer 5

A word, name, symbol, or device that is used in trade with goods to indicate their source

Question 6

Copyright

Answer 6

Right to exclude all others from reproducing, distributing, or performing a work

Question 7

Gary Becker’s Criminal Decision Rule characteristics

Answer 7

• Assumption that people are rational
• Compare current state to expected state
• Based on utility

Question 8

Gary Becker’s Criminal Decision Rule Equation

Answer 8

Expected Utility = (1- pi)(Current utility + Payoff) + pi(Current utility - fine)

Question 9

Variables of Interest in Criminal Decision Rule

Answer 9

• Size of punishment (F)
• Probability of being caught (pi)
• Payoff of crime (G)
• Income (Y)

Question 10

Cycle of Criminal Decisions: Bar Example

Answer 10

• Bars punished with larger penalties for honoring fake IDs
• Many bars implement new procedures to catch fakes
• Fake ID manufacturers are investing more in forging devices

Question 11

Why is global enforcement of copyright infringement difficult?

Answer 11

• Copyright protection stops at a country’s borders unless other countries grant reciprocal protections
• Very high enforcement costs to target individual users