Topic 2

Question 1

Communal property rights mean what?

Answer 1

There’s no single owner and everyone has access to it

Question 2

What do communal property rights mean for costs and benefits?

Answer 2

Costs are minimized and profits are maximized

Question 3

Government property rights mean what?

Answer 3

Property decisions are made by a small group of elected political representatives

Question 4

Secure Private Property Rights mean what?

Answer 4

Property owners are given incentive to create value with property, maintain property and conserve for the future, innovate and create new technologies, and engage in voluntary exchange

Question 5

What are the three types of formal intellectual property rights?

Answer 5

Patents, trademarks, and copyrights

Question 6

What is the main problem with copyrights?

Answer 6

There is a general lack of enforcement and the large number of traders makes it hard to regulate

Question 7

Under economist Gary Becker’s Criminal Decision Rule, when is committing a crime justified financially?

Answer 7

When the expected utility from committing the crime is greater than current utility

Question 8

The size of the punishment is represented by what and controls what?

Answer 8

F represents the size of the punishment and is controlled by the government and remains a strategic variable for the government

Question 9

The probability of being caught is represented by what and controls what?

Answer 9

π represents the probability of being caught and the government controls this with detection technology

Question 10

The payoff of the crime is represented by what and controls what?

Answer 10

G represents the payoff of the crime, and once a particular crime is chosen the payoff is fixed so this isn’t considered “strategic” to anyone

Question 11

One’s income is represented by what and controls what?

Answer 11

Yo represents one’s income, and changes to income don’t affect the decision to commit a crime in the model