The absence of a legal system that protects property rights and the la

QUESTION

The absence of a legal system that protects property rights and the lack of machinery to enforce that system in a market economy usually results in:

A. an improvement in the operating efficiency of newly privatized firms.

B. reduced barriers to foreign direct investment and international trade.

C. an increase in the incentives to engage in economic activity.

D. deregulation and privatization of the economy.

E. the lack of incentive to engage in economic activity.

ANSWER

E
Without a legal system that protects property rights, and without the machinery to enforce that system, the incentive to engage in economic activity can be reduced substantially by private and public entities, including organized crime, that expropriate the profits generated by the efforts of private-sector entrepreneurs.