Practice_Chapter 21 - CHAPTER 21 UNDERSTANDING THE BUSINESS...

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CHAPTER 21 - UNDERSTANDING THE BUSINESS ENVIRONMENT: THE ECONOMICS OF REGULATION The enforcement of contracts and the adjudication of contract disputes through the court system: A. is a major source of business inefficiency in the United States. B. is not common in most of Europe. C. is an important way to reduce transactions costs. D. weakens the system of property rights. If property rights are enforced and contracts in trade are legally respected, it is usually assumed that: A. output will begin to fall. B. investment will be encouraged. C. transactions costs will rise. D. government is unnecessary. In parts of Eastern Europe, companies maintain special guards to protect payday funds, to help move products to market, and to enforce immediate payment for products sold to retailers. All of these features indicate: A. that property rights are respected and transactions costs are low. B. that property rights are weak and transactions costs are low. C. that property rights are weak and transactions costs are high. D. that property rights are respected and transactions costs are high Most governments enforce patents, copyrights, and trademarks. While these are clear restrictions on free trade, it is believed that inventors and investors: A. generally oppose these restrictions as monopolistic. B. favor these restrictions since they promote inventive activities. C. are indifference since they have no impact on business. D. prefer low prices to patents. The transactions costs of writing and enforcing contracts are higher in: A. countries with poorly-enforced property rights. B. countries with strongly-enforced property rights. C. all counties with good court systems. D. countries without political risks of property confiscation. Alternative Dispute Resolution (ADR) is used to: A. eliminate the need for a court system. B. solve problems with public goods. C. stop frivolous suits. D. reduce the high cost commercial litigation.
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Informational deficits of producers or consumers, plus problems of externalities, can: A. cause market failure.
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