Property Rights Change Creates Ownership Surplus

Steps:

• Identify the change: Assignment of property rights to the landowner.
• Analyze impacts: Enables efficient use, generating surplus areas X and Y on the supply-demand graph.
• Distinguish surplus types: Ownership surplus accrues to the rights holder; total surplus includes all gains.
• Select matching option: C describes the specific surplus from rights ownership.

Why C is correct:

• Ownership surplus is the economic gain to the property rights holder from the change, per Coase theorem, equaling areas X + Y.

Why the others are wrong:

• A: Landowner gains depend on bargaining; not guaranteed as X + Y.
• B: Motorists may lose or gain via negotiation; not directly X + Y.
• D: Total surplus includes deadweight loss recovery, exceeding just X + Y.

Final answer: C