ECO320 Tutorial#1.docx - ECO320 Tutorial #1 1. Besides...

ECO320 Tutorial #1
1. Besides efficiency, what other policy values should matter to making law and applying it?
c. Fairness: should fairness matter or not?
2. Using economic analysis, what is the most optimal way to change a law? Majority vote?
Or court decisions by judges?
3. With the coming legalization of marijuana in July 2018, should the smoking of marijuana
be regulated the same way as cigarettes? How could the government apply cost benefit
analysis what are the issues?
4. In the farmer rancher problem, we assumed that transaction costs were zero.
Transaction costs would be, for example, the cost of hiring a lawyer to go to court to sue
the rancher if the rancher ignored the rule requiring the rancher to pay the farmer

damages caused by the cattle to the wheat. What if the transaction costs exceed the
compensation won at court? What would the farmer do?