The legal system provided by the government is necessary for the smooth working of markets because
A) it keeps criminals off of the streets.
B) it defines and protects property rights.
C) it is set up in the U.S. constitution.
D) it ensures that producers maximize their profits.

Question

Quizplus · Accepted Answer

The legal system defines and protects property rights, which is essential for the smooth working of markets because individuals and firms must have the ability to own and trade property without fear of theft, fraud, or other types of unlawful activity. This security of property rights encourages investment and innovation, leading to economic growth and development. The other answer choices are either incomplete or incorrect in their description of the role of the legal system in markets.

The Legal System Provided by the Government Is Necessary for the Smooth