SECTION B: True or False (3 points each)

1.The Coase Theorem implies that, if transaction costs are low or zero, the parties involved in a

property rights dispute will have no incentive to argue their case in court, since an

economically efficient result can be achieved by bargaining.

2. When assigning property rights in stolen goods, it is always most economically efficient to

give the property right to the original owner, thus placing the risk of loss on the person who

buys from the thief.

3. From the economist's point of view, police power regulation is efficient if its effects are to

take the land for public use, i.e exercises of this policy should be in the public's interest.

4. In assigning property rights to "property procured by fraudulent or deceitful means", it is

always mostefficient to use the rule of "first possession" which says that the prior rightful

owner has title superior to that of the bona fide purchaser.

5. In Japan, workers cannot be fired once they have been hired; therefore, in Japan a

minimum wage law would not cause unemployment.

6.In property rights theory, strict liability law is useful because it serves to "quiet" the trespass

action i.e this law certifies title to land by enforcing the legitimate landowners' right to

exclude.

7.In property rights theory, nuisance or negligence liability is often applied when someone steps foot onto

land posted with a sign against trespass.

8. In property rights theory, police power regulation implies that the government possesses the

power to take title away from private landowners, with or without their consent.

9. In Economics, the cost of a week of vacation in Cancun is simply the money cost of the plane,

food etc.

10.In property rights theory, covenant law is defined as a process by which a local government determines

how land in different areas oftown can be used.