Property rights and territorial hunting rights

Assignment Brief

Please define the following and give an example from the colonial era:

1. Complementary goods
2. Substitute goods
3. Import substitution goods
4. Mercantilism
5. The free rider problem
6. Tragedy of the commons

Please answer the following multiple-choice questions:

Property rights and territorial hunting rights:

1. had little bearing on the depletion of the beaver in 1700s.
2. were lacking and thereby crucial to depletion of the beaver in the 1700s.
3. could have provided incentives against overharvest of the beaver in the 1700s
4. Both b and c are correct.
5. None of the above are correct.

If a product exhibits decreasing returns to scale, then the average cost of making the product will __ as its production increases?

1. Increase.
2. Decrease.
3. Remain the same.
4. There is insufficient information provided to ANSWER the question.

If a product exhibits increasing returns to scale, then the average cost of making the product will __ as its production decreases?

1. increase.
2. decrease.
3. remain the same.
4. there is insufficient information provided to answer the question.

According to the principle of comparative advantage,

1. a country will benefit by specializing in the production of goods in which it has a relatively lower cost of production.
2. a country will benefit by specializing in the production of goods in which it has a relatively higher cost of production.
3. a country will benefit by importing goods in which it has a relatively low opportunity cost.
4. a country will benefit by becoming economically self-sufficient.

Please answer the following short response questions. Please use at least 4 complete sentences for each question (more is okay):

1. How would you describe the market for indentured servants; as a monopoly, an oligopoly, or a competitive market? Justify your answer (why).
2. Suppose the only input in agriculture is time and the following chart depicts the time it took for the Middle Colonies and New England to produce barley and milk. Using the principle of comparative advantage, what would be the most efficient solution? Justify your answer (this one will require some math and a bit of research about comparative advantage).

Sample Answer

Property Rights and Territorial Hunting Rights: An Economic Perspective

Definitions and Colonial Examples

Complementary Goods

Complementary goods are products that are used together because the consumption of one enhances the use of the other. For example, during the colonial era, rifles and gunpowder were complementary goods; rifles needed gunpowder to function effectively in hunting or warfare. Without one, the other lost value.

Substitute Goods

Substitute goods are products that can replace each other in consumption. In the colonial period, beaver pelts and deer hides could serve as substitutes in the fur trade. If beaver became scarce due to overhunting, traders might have relied more on deer hides to satisfy demand for fur clothing.

Import Substitution Goods

Import substitution goods are locally made products that replace imports to reduce foreign dependency. For instance, during colonial times, homespun cloth was produced in the colonies to replace imported British textiles, especially after boycotts during tensions leading up to the American Revolution.

Mercantilism

Mercantilism is an economic theory that promotes government control over trade to increase national wealth, often through a favourable balance of trade. Colonies under British rule, for example, were forced to export raw materials like tobacco and cotton to Britain and import finished goods, aligning with mercantilist policy.

The Free Rider Problem

The free rider problem occurs when individuals benefit from resources or services without paying for them, leading to under-provision. In colonial settlements, public defences or road maintenance often suffered because settlers used these services without contributing resources or labour, expecting others to do so.

Tragedy of the Commons

The tragedy of the commons refers to overuse of a shared resource because individuals act in their own interest, depleting the resource for everyone. A good colonial example is the overhunting of beavers in unregulated lands, where no one had exclusive hunting rights, leading to depletion of the beaver population by the 1700s.

Multiple Choice Answers

1. Property rights and territorial hunting rights:
Correct answer: Both b and c are correct.
Explanation: The absence of clear property rights led to overhunting, while secure rights could have given hunters incentives to manage beaver populations sustainably.

2. If a product exhibits decreasing returns to scale, then the average cost of making the product will __ as its production increases?
Correct answer: Increase.

3. If a product exhibits increasing returns to scale, then the average cost of making the product will __ as its production decreases?
Correct answer: Increase.

4. According to the principle of comparative advantage:
Correct answer: A country will benefit by specializing in the production of goods in which it has a relatively lower cost of production.

Continued...