Markets may fail to allocate resources efficiently when property rights are not well established

In the real loanable funds market, the vertical and horizontal axes, respectively, are:

a. Nominal interest rate and nominal loanable funds. b. Real interest rate and real loanable funds. c. Real, risk-free interest rate and real loanable funds per time period. d. Real, risk-free interest rate and real loanable funds. e. None of the above.

Jason, a high-school student, mows lawns for families in his neighborhood. The going rate is $12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also

offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price? A) He would lose some but not all his customers. B) Initially, his customers might complain but over time they will come to accept the new rate. C) If Jason raises his price, he would lose all his customers. D) If Jason raises his price, then all others supplying the same service will also raise their prices.