If transactions costs are high and the number of individuals involved is large,then the assignment of property rights _____.
A)will eventually lower transactions costs
B)will overcome the free rider problems
C)matters for economic efficiency
D)does not matter to the participants

Question

Quizplus · Accepted Answer

When transactions costs are high and the number of individuals involved is large, the assignment of property rights becomes crucial for achieving economic efficiency as it can provide incentives for individuals to invest in the efficient use of resources, negotiate with one another, and overcome free rider problems. Therefore, the best choice is C, which states that property rights matter for economic efficiency. The other options, A, B, and D, do not necessarily apply in this scenario.

If Transactions Costs Are High and the Number of Individuals