QUESTION ONE. (Total Points: 12) Answer two of the three questions below. Each question is worth 6 points.

1)     In many tropical rainforests around the globe, it is not uncommon that entitlements to the use of land are frequently "possessary" rights rather than "ownership" rights.  In other words, those on the land can use it as they wish, but they cannot transfer it to anyone else.  One can acquire a new plot by simply occupying and using it, leaving an old plot available for someone else. Would this type of entitlement system cause more or less incentive to conserve the rainforests than ownership entitlement? Why? Use the four characteristics of efficient property rights to answer the question.

2)     A demand function exhibiting constant elasticity generally takes the following form: