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The structure of property rights can determine how natural resources are used. In general, economists argue that private property rights regimes are more likely lead to an efficient allocation of the resource. However, private property rights are difficult to achieve with some resources and other property rights systems either naturally emerge or, due to the absence of private property, take precedence.

(A) What are the characteristics of private property and why do economists believe these characteristics lead to efficient allocation of the resource?

(B)Can you think of actual situations where private property rights are bounded (limited) by the government or other stakeholders who may have an interest in how private property is used? Why have these situations arisen and what might be the implication for how the resource in question gets used?

(C)What are the other property rights systems we have discussed in class?

(D)Describe actual situations where these types of property rights systems exist.

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NOTE: I am just trying to wrap my head around these concepts so what I would like to know is of these 6 available options, which three, would be the simplest in terms of theory to explain? _______________________________________________________________________ Thevast majority of economists are classically trained, which means we tend to see the free and unencumbered functioning of the marketplace as yielding the best economic outcomes. Where policy is needed is when the market fails to produce socially acceptable results. A prime example of market failure has to do with pollution: unless polluters are forced to incorporate into their financial calculations the costs of the pollution they cause, they will overproduce and continue to destroy the environment. The following list describes situations where the government may want to step in: ____________________________________________________________________________________________________________________________ 1. Monopoly power: Markets may fail to control the abuses of monopoly power.---------- 2. Missing markets: Markets may fail to form, resulting in a failure to meet a need or want, such as the need for public goods, such as defense, street lighting, and highways. ------3. Incomplete markets: Markets may fail to produce enough merit goods, such as education and healthcare.------- 4. De-merit goods: Markets may also fail to control the manufacture and sale of goods like cigarettes and alcohol, which have less merit than consumers perceive. --------5. Property rights: Markets work most effectively when consumers and producers are granted the right to own property, but in many cases property rights cannot easily be allocated to certain resources. Failure to assign property rights may limit the ability of markets to form.-------- 6. Information failure: Markets may not provide enough information because, during a market transaction, it may not be in the interests of one party to provide full information to the other party. ______________________________________________________________________________________________________________________________________Pick three from this list and explain what types of policies might be proposed to offset the market’s failure. Explain why your proposals might work but also if the policies themselves might have negative side effects.
1. With regard to health care spending patterns, we can say that
 
A. Everybody demands the same basic level of health care
B. Health care spending varies dramatically according to governments willingness to pay for such services
C. Men demand much more medical care than women
D. The elderly need much less health care than adults do
E. Only a few people (less than 5 percent) consume more than half of all health care expenditures
 
2. Which of the following is the best example of a renewable resource?
 
A. Crude petroleum
B. The ozone layer in the atmosphere
C. Library book
D. Minerals
E. Trees
 
3. All of the following are reasons for health care expenditures in the U.S. Rising EXCEPT
A. The government (FDA) restricts entry of drugs to the U.S. Marketplace
B. The demand for health care has risen
C. The federal government has had such a small role in health care
D. The supply of physicians is restricted by the American medical association
E. Health insurance is regulated on a state by state basis so someone cannot buy a less expensive policy from an insurer in another state
 
4. Free market economists argue that
 
A. Markets will not adjust to a demand shock without government intervention
B. Markets will adjust to a demand shock without government intervention
C. Central planners are best equipped to handle external shocks and get the economy back on track
D. It would take the government too long to intervene and get the economy back on track
E. Government intervention is necessary to get the economy back on track
 
5. True or false? The health care restrictions and regulations prevent the entry and exit of firms and prevent the effect of competition on prices.
 
6. True or false? In a market system, those who own the most highly valued resources have the highest incomes.
 
7. True or false? Since consumers do not have to choose whether to use their own money for health care or for something else, the role of price as an allocation mechanism does not work in health care.
 
8. Health economics is important to study for all of the following reasons EXCEPT
 
A. Spending on health care in the U.S. exceeds $2 trillion
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C. Only 1% of the population account for almost 30% of total health care expenditures
D. Health care expenditures have risen from 5.9% of GDP in 1965 to over 16% of GDP today
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9. An illegal drug dealer will maximize profit by providing and selling the number of drugs where
 
A. Private costs equal social costs
B. The greatest number of consumers can be derived
C. The price is maximized
D. Private property rights are best defined
E. Marginal revenue equals marginal cost

When an owner of a productive resource deploys that resource where he gets the highest price for it, he is not only deploying that resources where it will create greatest value of final output but is also maximizing his own welfare. The greed of the owner and the efficient allocation of productive resources are congruent in a capitalist economy.

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