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ECON 484 Day 1 - Chapter 2 MB = MC(Engage up until Demand...

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Chapter 2 MB = MC (Engage up until) Demand Curve = MB Curve more or less Supply Curve = MC Curve @ Equilibrium = where they cross and MB is maximized Net benefit, left triangle Bot. Left triangle = PS Top Left triangle = CS (MR = MC) = (MB=MC) MRP = MRC (Additional units of labor) Efficiency is where MC = MB Always face opportunity costs Product Risk Example in book – Produce product spends as much on the precautionary labels as the amount of money allocated to designing the safety of the product. Don’t confuse efficient and what “we” actually ought to do MB = MC and the corresponding net benefits Examples: Pollution Control Police Protection Provision of Judicial Services Provision of Prisons Provision/acquisition of information Market Failure Monopoly – Not efficient Externalities: Exercise of property rights (Pollution – Chemicals into the atmosphere, back into acid rain from producer in Illinois, can go from America to Scandinavia). Asymmetric Information: Contracts (One party knows more than the other) Chapter 3 – An Introduction to Law and Legal Institutions The Civil Law and Common Law Traditions (Common Law practiced in the U.S.) Common law and the role of precedent: Britain and the United States (Common law is ostensibly rooted in the “common practices” of people) Constitution to Legislature to Executive Branch to Judiciary (Executive signs bill into effect, President) Note that the Judiciary Can “Make” ( their guess at what the constitution means) Law through its Interpretation of Statutes The role of juries in each tradition
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U.S still relies heavily on juries, most other countries do not. How do we assess the relative efficiency of the two approaches? Jury nullification (may or may not be guilty, not guilty despite evidence to make amends to former wrongly convicted blacks. O.J. Simpson case) Role of the judiciary in each system The Nature of a Legal Dispute Cause of action: A valid claim against another person or organization Plaintiffs, defendants, and the court’s determination of whether there is, in fact, a cause of action Generally speaking, the court can choose among dismissal (no valid cause of action), summary judgment for the defendant (the defendant has provided a convincing response, or allowing the case to proceed to trial “Preponderance of the evidence“ versus ” beyond a reasonable doubt” Standard of proof in civil cases versus criminal cases Judgment on the verdict The “Aupere case” Nanny accused of shaking baby, death The appeals process How Legal Rules Evolve: Three cases in Tort Law: The overriding question here is “Who will bear the cost of an accident?” Will it be the plaintiff (victim) or the defendant (injurer)? From an economic perspective, the answer should depend on how the ruling affects the incentives for parties to behave efficiently with respect to accidents.
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