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Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, ...

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Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, ...

Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, population (800,000), education of workforce, and value of natural resources owned.

Refer to the scenario above. Some people in Sourland have been pushing for better protection of property rights. Critics have pointed out that companies would likely have to incur high costs to meet new standards. Such a reform could ________.

▸ give companies greater incentive to develop new technology, leading to higher output in the long run

▸ increase competition, leading to reduced output in the long run

▸ reduce competition, leading to higher output in the long run

▸ decrease companies' desire to spend on research and development, leading to higher output in the long run

Textbook

Macroeconomics

Edition: 3^rd

Authors: Acemoglu, Laibson, List

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You make an excellent tutor!

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