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Author Question: Define the term property rights. Explain why the lack of well-defined and enforceable property ... (Read 200 times)

BrownTown3

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on: Jun 29, 2018
Define the term property rights. Explain why the lack of well-defined and enforceable property rights is detrimental to the smooth functioning of a market system.
 
  What will be an ideal response?

Question 2

What kinds of risks can't be insured?
 
  What will be an ideal response?


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Liamb2179

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The term property rights refers to the rights that individuals or firms have to the exclusive use of their resources, within the confines of the law. Well-defined and enforceable property rights provide the incentive for people and firms to invest resources and undertake risks. This encourages the production of a wide range of goods and services. Without property rights and the means to enforce these rights, no person would want to undertake such a risk.

Answer to Question 2

Insurance works because the risks of adverse outcomes are independent, that is, one person suffering a loss does not affect the likelihood that other people will suffer similar losses. If the losses from an event are not independent, so that everyone suffers a loss at the same time, then the risk of loss cannot be insured.


BrownTown3

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

bbburns21

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Reply 3 on: Yesterday
Excellent

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