Comment on how extractive institutions affect:
a) the return-to-entrepreneurship schedule.
b) the opportunity cost of entrepreneurship schedule.
What will be an ideal response?
a) By creating insecure property rights and limiting legal back up, extractive institutions make entrepreneurship less profitable and shift the return-to-entrepreneurship schedule leftward.
b) By creating entry barriers, extractive institutions make entry more costly and shift the opportunity cost of entrepreneurship schedule upward.
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The Fed conducts an open market purchase of securities of $5,000. If the currency drain ratio is 0 percent and the desired reserve ratio is 10 percent, then the total increase in the quantity of money is
A) $4,000. B) $5,000. C) $20,000. D) $50,000. E) $10,000.
The ________ often workers get paid, other things constant, the lower their average money balances, so the ________ active the money supply and the greater its velocity
a. less; less b. more; less c. less; more d. more; more