33 - Chapter 33 NAME Law Introduction These problems are...

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Chapter 33 NAME Law Introduction. These problems are based on the survey of law and eco- nomics found in your text. We hope that you will be pleased to see that the techniques you learned in earlier chapters can provide useful insights into issues that arise in law. 33.1 (2) Madame Norrell makes her living in Florida by stealing gold buttons from designer jackets in expensive boutiques. She can sell each button to a fence for $10. The maximum number of buttons she can steal in a day is 50. Florida has a law against button theft. There is a fine of F dollars if someone is caught stealing any number of buttons. The police catch about 10 percent of all button thieves, and these must pay the fine and forfeit any buttons they have stolen. (a) Suppose that the only thing that Madame Norrell cares about is her expected profits. What is the smallest fine that will discourage Madame Norrell from stealing buttons? 4,500. (b) Due to an oversupply of buttons, Madame Norrell’s fence announces that he will no longer pay her a flat price for buttons. If Madame Norrell delivers x buttons, she will be paid 5 ln x . (Assume that Madame Norrell will take at least 1 button if she takes any at all.)
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