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PS7_answers - Legal Studies 145 Law and Economics I Answers...

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Legal Studies 145 - Law and Economics I Answers to P ROBLEM S ET #7 1. Economists probably determined that the social cost of reducing the legal alcohol limit for drivers was less than the social cost of reducing the speed limit. There is more value in faster transportation than in the freedom to drink more before driving. The efficient standard of care balances the marginal benefit of additional care (reduced accidents) with the marginal cost. Mr. Johnson was probably negligent because the value of his being able to drink before driving was probably less than the likely cost of additional accidents he might cause. Ms. Smith may also have been negligent if running elsewhere, earlier and with more reflective clothing would cost her less than the likely cost of accidents avoided. Of course, the likelihood of such accidents might be very low if negligence such as Johnson's is extremely rare. 2. The cost of an injury may be much higher for an athlete than for an ordinary person.
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