Question

In the foreword to a report on property rights around the​ world, Peruvian economist Hernando De...

In the foreword to a report on property rights around the​ world, Peruvian economist Hernando De Soto noted​ that: "countries that have weak property rights also struggle to develop​ strong, innovative economic​ markets."

​Source: Hernando De​ Soto, "Forward," International Property Rights​ Index,

2016​,internationalpropertyrightsindex.org.

What does De Soto mean by​ "strong, innovative economic​ markets"?

A.

These are markets that use natural resources in the production of goods and services.

B.

These are markets that are profitable for entrepreneurs.

C.

These are markets that use existing technology to produce new goods and services.

D.

These are markets that search out opportunities to provide new goods and services.

Why would such markets be important for a country that is hoping to raise the standard of living of its​ residents?  

A.

These markets can result in stronger government regulations.

B.

There is less international trade with​ strong, innovative markets.

C.

​Strong, innovative markets result in more economic growth.

D.

​Strong, innovative markets can result in greater income equality.

What do property rights have to do with developing such​ markets?

A.

Property rights increase the value of holding cash.

B.

Property rights make it more likely that investments will be made.

C.

Property rights protect firms from unfair competition.

D.

Property rights decrease the returns from investing.

Business   Economics   
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Answer #1

1. D. These are markets that search out opportunities to provide new goods and services. For consumers, innovation of new goods and services means availability of more choices and thus consumers are empowered.

2. C. ​Strong, innovative markets result in more economic growth. For businesses, innovative economic markets results in sustainable growth which leads to greater profits. Employees find their job more demanding for the sake of innovation and so are paid more. The economy gains more as innovation means bigger productivity and prosperity for all.

3. C. Property rights protect firms from unfair competition. This creates incentive for firms to strive for innovation and ultimately the economy gains.

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