In parts of Eastern Europe, companies maintain special guards to protect payday funds, to help move products to market, and to enforce immediate payment for products sold to retailers. All of these features indicate:

Question

Quizplus · Accepted Answer

The fact that companies maintain special guards to protect payday funds suggests that there is a risk of theft, which is an indication that property rights are weak. Similarly, the need for guards to enforce immediate payment for products sold to retailers implies that there is a risk of default, which also suggests weak property rights. Additionally, the need to move products to market suggests that there may be barriers to trade, which indicates that transactions costs are high. Therefore, the correct answer is C - that property rights are weak and transactions costs are high.

In Parts of Eastern Europe, Companies Maintain Special Guards to Protect