If property rights are not clearly defined and enforced, then
A) some potential gains from specialisation and trade are lost.
B) incentives for specialisation based on comparative advantage are weakened.
C) resources are devoted to protecting possessions rather than to production.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

When property rights are not clearly defined and enforced, it leads to a loss of potential gains from specialization and trade, weakens incentives for specialization based on comparative advantage, and results in resources being devoted to protecting possessions rather than to production. This is because clear and enforceable property rights are fundamental for economic transactions and investments, encouraging individuals and businesses to engage in productive activities with the assurance that their assets and returns are protected.

If Property Rights Are Not Clearly Defined and Enforced, Then