Question

Select items that affect incentives for people to produce and exchange goods and services. liability rules, property rights, contract enforcement or standards for weights and measures

Answer 1

Property rights are an incentive to produce and exchange goods because:

• One will want to produce more in order to get more profit, which leads to technological development.
• One has an incentive to invest in order to obtain more profit.
• Property rights should also be extended to intellectual property, in which intellectual work is rewarded through patents.

Contract enforcement

• It provides assurance of the rights and obligations that both parties have to fulfill.
• It lowers the costs both for producing and exchanging goods, people know what to expect.
• Lowers the costs that come with uncertainty.

Standards for weights and measures

• It provides a common trading ground lowering the costs that are associated with uncertainty.
• Makes trade easier by providing equivalences.
• Unifies trade and makes it faster.