Consider two countries, A and B. Assume that both countries have identical physical endowments of iron ore. In country A, any profits made from mining the iron ore are subject to confiscation by the government. While in country B, there is no such risk. How does the risk of expropriation affect the economic endowments of the two nations? Which nation would you think would be richer? Why? Given your answer to the above, why is there widespread political support for government policies that expropriate resources from some groups for the sole purpose of handing them out to other groups
Consider two countries, A and B. Assume that both countries have identical physical endowments of iron ore. In country A, any profits made from mining the iron ore are subject to confiscation by the government. While in country B, there is no such risk. How does the risk of expropriation affect the economic endowments of the two nations? Which nation would you think would be richer? Why? Given your answer to the above, why is there widespread political support for government policies that expropriate resources from some groups for the sole purpose of handing them out to other groups
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter33: International Trade
Section: Chapter Questions
Problem 8QP
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Consider two countries, A and B. Assume that both countries have identical physical endowments of iron ore. In country A, any profits made from mining the iron ore are subject to confiscation by the government. While in country B, there is no such risk. How does the risk of expropriation affect the economic endowments of the two nations? Which nation would you think would be richer? Why? Given your answer to the above, why is there widespread political support for government policies that expropriate resources from some groups for the sole purpose of handing them out to other groups?
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